High Oil Prices Set to Ease: IEA

Seven-year high oil prices may start to ease as production recovers in the United States and elsewhere, according to a report by the International Energy Agency (IEA). As demand growth remains strong, supply is catching up, which is evident in changes in oil stockpiles in October.

“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon,” the Paris-based agency said. “Production in the US is ramping up in tandem with stronger oil prices,” it added.

The IEA forecasts US production to climb by 1.1 million barrels a day in 2022, amounting to 60% of the growth outside the OPEC+ coalition. The agency also upped its 2022 average Brent crude oil price assumption to US$79.40 a barrel and US$71.50 a barrel the current year.

"We publish our price assumptions when we think that this can be useful for the understanding of our forecast," the agency said in a statement to Reuters. "As current prices are getting more elevated, they start to have a significant effect on demand," it added.