LONDON: Iraq's oil growth targets look increasingly at risk, the International Energy Agency said, as threats to supplies from political instability and violence grow just as demand is picking up due to a stronger global economy.
Iraq is the second-largest producer in OPEC and its northern exports have been offline since March. OPEC output has also been hit by unrest in Libya, sanctions on Iran and oil theft in Nigeria.
"Within OPEC, Iraq remains the main source of most of the expected capacity growth, but this expansion looks increasingly at risk," Maria van der Hoeven, the IEA's executive director, wrote in the report's Foreword.
Still, the adviser to the United States and other industrialised countries also said in its Medium Term Oil Market Report on Tuesday that global growth in oil demand may start to slow down by the end of this decade due partly to high prices, and shale oil would start to spread outside the United States.
Oil prices jumped to almost $115 a barrel last week, the highest since September, as advances by insurgents in Iraq raised concern that more of the country's supply could be disrupted.
At present, the agency expects OPEC to increase its production capacity by 2.08 million barrels per day (bpd) - to 37.06 million bpd by 2019. More than 60 percent of the growth is expected to come from Iraq.
The report contrasts with the IEA's previous medium-term update in May 2013, which forecast U.S. shale oil would help meet most of the world's new oil demand, leaving little room for OPEC to lift output without risking lower prices.
Now, the IEA expects world oil demand in 2014 to average 92.76 million bpd, 960,000 bpd more than expected in May 2013. Global demand growth will accelerate to 1.42 million bpd next year from 1.32 million bpd in 2014, it said.
The Organization of the Petroleum Exporting Countries will need to pump more oil than expected in the previous medium-term report, the IEA said, raising its forecast of demand for OPEC crude plus inventories by 900,000 bpd to 30.1 million bpd in 2014.
"Oil markets are in many ways tighter today than they were at the onset of the U.S. shale and tight oil boom, and considerably tighter than they were a year ago," the IEA said.
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