Nov. 14 (UPI) -- Unless OPEC agrees to cut more production, output from non-member states will leave the market in surplus and limit the rally in oil prices, the IEA said.
Some ministers for the Organization of Petroleum Exporting Countries said an extension of an agreement that sidelines about 2 percent of the total global demand for oil in an effort to balance the market was necessary next year.
Saudi Crown Prince Mohammed bin Salman said in October that the deal was working and demand was moving closer to the level of supply, but extraordinary action was needed for further rebalancing. The effort, which started in January, is credited with pulling the price of oil back from the sub-$30 per barrel range last year to two-year highs in recent sessions.
The International Energy Agency said in its market report for November that recent trends toward balance were supported by lower production from OPEC members like Iraq and Venezuela, which may be temporary. Iraqi production may be handicapped in the wake of conflict in the north that coincided with the liberation from the terrorist group the Islamic State and a contentious referendum for independence for the Kurds. Venezuela, meanwhile, is struggling with debt loads and sanctions imposed because of questions over recent elections.
The IEA said planned and unplanned disruptions from OPEC may be offset elsewhere, however.
"The reality is that even after some modest reductions to growth, non-OPEC production will follow this year's 700,000 bpd growth with 1.4 million bpd of additional production in 2018 and next year's demand growth will struggle to match this," it's monthly report read. "This is why, absent any geopolitical premium, we may not have seen a 'new normal' for oil prices."
The difference between supply and demand isn't as tight as "some would like," the IEA added.
The price for Brent crude oil, the global benchmark, was near $63 per barrel early Tuesday, up more than 30 percent since the end of June. In their report last month, OPEC economists said anything above $55 per barrel for 2018 would likely stimulate drilling activity in the United States, where gains supported last year's glut.
In its drilling productivity report for this month, the U.S. Energy Information Administration said it expected oil production from the seven main inland shale basins to increase about 1.3 percent in December.
Last week, drilling services company Baker Hughes reported an increase in rig activity in the United States, suggesting further production gains are possible.