Oil price may have “bottomed out” as output from non-OPEC suppliers began to fell quickly and Iran’s production is less dramatic than people’s estimates, the International Energy Agency said on Friday.
The production in countries outside the Organization of the Petroleum Exporting Countries declines much faster than expected. The IEA said that the output will fall by 750,000 barrels a day this year, compared with its previous estimate of 600,000 barrels a day.
“This should not, however, be taken as a definitive sign that the worst is necessarily over,” said the IEA, which monitors energy trends for industrialized countries. “Even so, there are signs that prices might have bottomed out.”
Another good sign for oil is that Iran restores its production much more slowly than expected. Iran planed to add 500,000 barrels a day to the market with months after international sanctions. But in fact it only had an increase of about 220,000 barrels a day over January. Its output was only 3.22 million barrels a day in February.
“Iran’s return to the market has been less dramatic than the Iranians said it would be…provisionally, it appears that Iran’s return will be gradual,” the IEA said.
The IEA said that U.S. oil production would fall by 530,000 barrels a day this year. The agency also lowered its supply outlook for Brazil and Colombia.
The oil price has recovered 50 percent since its low in January.
“Without an increase in demand expectations high cost oil suppliers will continue to bear the brunt of the market-clearing process,” the agency said. “It is clear that the current direction of travel is the correct one, although with a long way to go.”