Non-Opec supply not enough - IEA

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 (IEA) said.

The IEA, adviser on energy to 26 industrialised nations, also nudged up its world oil demand growth forecasts for this year and next in a 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.

For their part, non-OPEC countries are falling behind in their deliveries of new oil.

Non-Opec countries are set to pump only 675,000 barrels per day (bpd) of fresh oil this year, sharply down on the additional 1.1 million bpd in 2004, said the energy watchdog.

The Paris-based agency cut non-Opec supply growth this year by 205,000 bpd, with unscheduled outages in the U.S. Gulf, Mexico, Norway and the UK accounting for 150,000 bpd of the lower estimate.

Russia, Africa and the Asia-Pacific region are also producing less than expected.

The picture is expected to brighten in 2006, with non-Opec supplies set to rebound to 1.25 million bpd. But that projection is also revised down from last month's report by 150,000 bpd.

With non-Opec offering only slim new volumes, Opec may need to turn up the taps. That responsibility would lie solely with top world oil exporter Saudi Arabia, the only Opec member with significant spare capacity.

The IEA reckons the kingdom holds 1 to 1.5 million bpd of mostly medium to heavy sour crude oil in reserve. But world refiners struggling to churn out light transport fuels are shunning those heavier barrels.

The IEA raised its requirement on Opec crude for the fourth quarter, the seasonal peak in demand, by 300,000 barrels per day (bpd) to 29.2 million bpd. Opec already exceeded that level in July, having pumped 29.6 million bpd, said the IEA.

"Stocks have built rapidly in the first half of 2005, despite $60 oil, but clearly, the market verdict remains that more inventories are needed."