July 12 (UPI) -- The International Energy Agency said in a report Friday that it excepts a new glut of oil supplies next year.
The French-based agency said oil supplies for the first half of 2019 surpassed demand by nearly a million barrels a day. The IEA added the global oil surplus for the second quarter was 500 million per day.
The IEA said surpluses have occurred despite a decision by OPEC and its allies to keep 1.2 million barrels of oil per day off the market since the beginning of 2019.
"Clearly, this presents a major challenge to those who have taken on the task of market management," the IEA said in its report. "The picture will evolve as 2019 progresses, but in the near term, the main area of focus remains demand growth.
"While the GDP estimates behind our forecast are unchanged from last month's report, there are indications of deteriorating trade and manufacturing activity. ... On the positive side, the mood surrounding the U.S./China trade dispute appears to have improved and the resolution of outstanding issues would be a massive boost to economic confidence."
IEA's Neil Atkinson, head of its oil industry and markets division, said Friday the United States has contributed to the glut because of growing output.
"As far as the issue of re-balancing is concerned, as we say in the lead article in today's report, re-balancing is still some way off," Atkinson told CNBC Friday.
The IEA report added that despite geopolitical tensions in the Middle East, particularly between the United States and Iran, the impact on oil prices so far has remained minimal.
"This is not the case for shipping costs with reports of Gulf insurance rates rising sharply. For now, maritime operations in the region are close to normal and markets remain calm due to economic weakness, high oil stocks and a significant spare production capacity cushion."