The International Energy Agency in its monthly market report revealed that the oversupply in the global market will be higher in H1 of 2016 than initial estimate, escalating the risk of more price falls as Iran and Iraq boost production while demand growth reduces.

According to the Agency, supply is likely to surpass consumption by 1.75 million bpd, compared to an estimate of 1.5 million in January, and could still rise if Organization of Petroleum Exporting Countries (OPEC) adds extra output. Iran increased its output in January, Iraqi capacities hit highest while Saudi Arabia also boosted output.

“With the market already awash in oil, it is very hard to see how oil prices can rise significantly in the short term. In these conditions the short term risk to the downside has increased," IEA said.

The prices of crude oil continues to linger near $30 per barrel. While prices regained its balance on rumors that OPEC might cooperate with non-members to cut production, IEA thinks the chance of organized cuts is very slim.

Output from OPEC’s members increased from 280,000 bpd in January to 32.63 million representing a 900,000 bpd rise from what is expected from the this year.

Iran increased output from 80,000 bpd to 2.99 million in January, Iraq boosted output from 50,000 bpd to 4.35 million and still likely to rise while Saudi Arabia, increased production from 70,000 bpd to 10.21 million bpd.

IEA had reduced its estimates for global oil demand for 2015 and 2016, by 100,000 bpd, forecasting the level of growth for 2016 to be 95.6 million per day. The agency’s forecast indicates that growth is weaker than the 1.6 million bpd achieved in 2015 during the slowdowns in Europe, China and U.S.

Supplies by non-OPEC members fell by 500,000 bpd in January compared to that of December, faltering yearly growth. Non-OPEC output will decline by 600,000 bpd in 2016, “the decline is taking an awful long time to happen,” the agency told Bloomberg.

Anita Fatunji