IEA cuts non-Opec oil supply growth forecast

Non-Opec nations are failing to deliver as much oil as expected this year, despite record high crude prices, leaving already stretched Opec to fill the supply void, the International Energy Agency said.

The IEA, adviser on energy to 26 industrialised nations, cut its projection for non-Opec supply growth by 205,000 barrels per day (bpd) to 675,000 barrels per day (bpd).

Non-Opec producers such as Russia and Norway are set to pump an average 50.8 million bpd on the 83.7 million bpd world market this year, the Paris-based agency said in its monthly report.

"Until the desire to hold more stocks is sated or the conditions that cause that are changed, the market will be looking for more supply and it will be looking to Opec," said Lawrence Eagles, head of the IEA's oil market division.

Slower growth in non-OPEC supplies this year - caused mainly by production snags in the North Sea and the US Gulf - looks skimpy when set against the 1.1 million bpd of new oil that was added to markets last year.

Some analysts say the IEA's non-Opec supply forecast is still too optimistic.

"Although today's IEA report is the most bullish one for some time... we remain highly sceptical of its projection of a massive increase in non-Opec supply over the second half of this year (a rise of 1.2 million bpd from Q2-Q4)," said Barclays Capital in a report.

"The flow of recent news (including worsening performance in North Sea oil output and further declines in Russian output growth) just does not support this kind of increase."

The IEA sees the picture on non-Opec supplies brightening in 2006, with growth rebounding by 1.25 million bpd to 52 million bpd. But that projection is also revised down by 150,000 bpd from last month's report.

With non-Opec offering meagre extra supplies, Opec may need to turn up the taps. The responsibility in that case would lie solely with top world oil exporter Saudi Arabia, the only cartel member with significant spare capacity.