Europe News

Pressure on oil to ease despite global tension: IEA

A surge in supply from Iraq and other oil producers should be more than sufficient to meet growing demand this year, reducing pressure on markets despite rising international tensions, the West's energy watchdog said on Friday.

"While international tensions may be on the rise, pressure on oil markets ... seems set to ease," the International Energy Agency(IEA) said in its monthly oil market report.

(Read more: Crimea referendum: Why it's so important)

Getty Images

The IEA, which advises most of the largest energy-consuming countries on energy policy, said Iraq's oil production surged by 530,000 barrels per day (bpd) in February to 3.62 million bpd, the highest since 1979.

Completion of infrastructure projects in Iraq's southern oil producing region allowed an increase in the country's exports to 2.8 million bpd last month, up 572,000 bpd.

Saudi oil output also rose last month, up 90,000 bpd to 9.85 million bpd, helping outweigh another drop in Libyan oil output and bringing total supply from the Organization of the Petroleum Exporting Countries to 30.49 million bpd, up 500,000 bpd.

The extra demand was partly a response to a very cold winter across North America, which led to a big draw in commercial oil inventories in the developed world.

(Read more: Ukraine PM: Crimea vote is a foregone conclusion)

The IEA said sharp drawdowns in oil stocks in the fourth quarter of last year continued into January but were now easing.

"Even though OECD stocks plummeted over the winter, we believe that was a one-off caused by very cold weather in the United States," Antoine Halff, head of the IEA's oil industry and markets division, told Reuters.

"There are reasons to be optimistic about supply and demand balances going forward."

Follow us on Twitter: @CNBCWorld