The global crude oil production capacity is expected to grow to 102 million barrels a day by 2017, well above demand forecasts of 95.7 million barrels a day, a latest update from International Energy Agency (IEA) noted today. This could lead to a deceleration in the oil prices the next five years as global production capacity increases and economic malaise keeps demand growth sluggish, but ongoing geopolitical risks could cause some turbulance, notes the IEA. 

The Agency said in its medium-term oil market report that oil production capacity is expected to grow to 102 million barrels a day by 2017, well above demand forecasts of 95.7 million barrels a day. The IEA forecasts significantly slower demand growth over the period than previously expected due to the steady decline in the economic picture over the last year.

Global oil demand is expected to grow at an average of just 1.1 million barrels a day over the next five years, a downward revision of 100,000 barrels a day from the agency's last medium-term report published in December.

The weak global offtake and more comfortable supply picture is expected to reduce the demand for oil from the Organization of Petroleum Exporting Countries and increase the buffer they can provide against supply disruptions. Better-than-expected growth in North American production as well as the prompt return of Libyan crude and the anticipated rise in Iraqi output is expected to keep oil supplies ample.

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