The International Energy Agency (IEA) says it believes oil prices may have bottomed out, according to Reuters. The energy agency considered declining US production, accelerating production in other countries, and a less-than-dramatic Iranian return to production as factors in its comments on the state of oil prices.
The IEA expects that non-OPEC output could fall by 750,000 barrels per day (b/d) in 2016 compared to its previous estimate of 600,000 b/d. US production alone could decline by 530,000 b/d this year, it believes.
Reuters noted that oil prices fell below $30 per barrel in January, in part due to a supply glut stemming from strong US output and OPEC's decision to increase supply to protect market share against higher-cost producers. Prices recently rose to $40 per barrel after Saudi Arabia and Russia suggested they could freeze output.
In February, OPEC output decreased by 90,000 b/d, in large measure due to production outages in Nigeria, Iraq, and the United Arab Emirates. The IEA estimates that Iran’s production increased by 220,000 b/d, marking a more gradual return to anticipated production levels than previously expected.