Azernews.Az

By Bloomberg

The oil market will rebalance in the next several months as a price collapse boosts demand and curbs supplies, the International Energy Agency said.

An oil price as low as $45 a barrel is unsustainable, Fatih Birol, the chief economist for the Paris-based adviser to 29 nations, said at a conference in London Thursday. Investment cuts in the U.S., Russia and Brazil will curtail output growth, bringing supply and demand back in line, he said.

“As a result of lower prices, there will be downward pressure on production,” Birol said, adding that the market will rebalance in the coming months or quarters. “As a result of lower prices, there will upward pressure on demand.”

Oil prices slumped almost 50 percent in 2014 as the Organization of Petroleum Exporting Countries maintained output amid the fastest U.S. production in three decades, perpetuating a surplus. While U.S. oil drillers have idled rigs the past 11 weeks, the nation’s output has continued to grow.

Chinese energy demand growth is slowing and will continue to do so in the coming years, he said. Iraq faces a “structural issue” in dealing with Islamic State militants who control parts of the country and that won’t be resolved in the short term, he said.