IEA: Don't expect oil prices to go much higher

Striking oil demand growth and a sustained global glut will boost oil prices and keep them from rising too much, preventing serious escalations in geopolitical tensions, Fatih Birol, CEO of the International Energy Agency (IEA), said Friday.

"The prices are determined by the markets … If we see the market today, we see that demand is shrinking significantly," Reuters quoted Birol as saying during an energy conference in India today.

According to the head of the Paris-based agency, large volumes of US oil come to flood the market, and oil production is also growing in Iraq, Brazil and Libya.

However, this increase in supply has created a global glut, the IEA said in its latest oil market report. The oil supply exceeded demand by 900,000 bpd in the first half of this year, the IEA said last week, and a warning that the oil market has changed.

"This surplus adds to the large warehouse buildings seen in the second half of 201[ads1]8 as oil production increased as demand growth began to fall. Clearly, market density is not a problem at the moment, and any rebalancing seems to have moved in the future, the IEA said.

In the July report, the IEA said that its oil demand growth in 2019 has changed little from the previous report and remains at 1.2 million bps.

But Birol told Reuters in an exclusive interview earlier this week, the agency cuts its 2019 demand growth forecast to 1.1 million bpd to slow down global economy.

"If the world economy does worse than we expect, we can even look at our figures again in the coming months , "Birol told Reuters.

Early on Friday, the oil price rallied after the United States Navy shot down an Iranian drone in the Hormuz String on Thursday. He took defensive action against an Iranian drone who had approached the ship too close despite many warnings to stop, said US President Donald Trump . The drone threatened the safety of the ship and the ship's crew, and was immediately destroyed, President Trump added.

Iran denied the incident and said all its drones over the Hormuz Strait were pronounced.

at 06: 21.00 EDT on Friday, WTI Crude was 1.37 percent at $ 56.18, and Brent Crude had jumped 1.74 percent at $ 63.01.

By Tsvetana Paraskova for

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