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Photo: Paul Ratje/AFP/Getty Images

Global oil production is dropping faster than expected as companies in North America and elsewhere curb output in response to the pandemic that has caused demand and prices to crater, the International Energy Agency said.

Why it matters: The monthly report this morning sounds guardedly optimistic notes about the stabilization of oil markets, noting that in addition to the production cuts, collapse in demand is slightly less dire than earlier predictions.

Between the lines: "Major uncertainties remain," the analysis warns. One is whether governments can successfully ease restrictions without sparking a resurgence of outbreaks.

  • Another is whether countries in the big OPEC+ group — which is led by Saudi Arabia and Russia — comply with their mid-April production-cutting pact.

The big picture: "It is on the supply side where market forces have demonstrated their power and shown that the pain of lower prices affects all producers. We are seeing massive cuts in output from countries outside the OPEC+ agreement and faster than expected," IEA said.

By the numbers: Output from nations that aren't part of the OPEC+ deal, led by the U.S. and Canada, was down by 3 million barrels per day in April compared to levels at the beginning of the year.

  • The decline could reach 4 million barrels per day in June, "with perhaps more to come," IEA said.
  • U.S. production alone could be 2.8 million barrels per day lower at year's end than it was at the close of 2019.
  • Meanwhile, IEA also trimmed its projection for demand loss. It now estimates that global demand this year will drop by 8.6 million barrels per day, lower than the prior projection of 9.3 million.

Go deeper: EIA forecasts U.S. oil boom will reverse amid coronavirus disruption

Go deeper

Ben Geman, author of Generate
Aug 17, 2020 - Energy & Environment

The oil industry faces deepening uncertainty

Illustration: Aïda Amer/Axios

The oil industry is facing an immense amount of uncertainty, even for a sector that bobs along in the currents of global markets and geopolitics despite its enormous power.

The big picture: As Democrats hold their convention this week, seeking a boost for Joe Biden heading into the heart of the 2020 campaign, the election is unfolding against another huge source of uncertainty for the industry: the coronavirus pandemic.

2 hours ago - World

Maximum pressure campaign escalates with Fakhrizadeh killing

Photo: Fars News Agency via AP

The assassination of Mohsen Fakhrizadeh, the architect of Iran’s military nuclear program, is a new height in the maximum pressure campaign led by the Trump administration and the Netanyahu government against Iran.

Why it matters: It exceeds the capture of the Iranian nuclear archives by the Mossad, and the sabotage in the advanced centrifuge facility in Natanz.

Scoop: Biden weighs retired General Lloyd Austin for Pentagon chief

Lloyd Austin testifying before Congress in 2015. Photo: Chip Somodevilla/Getty Images

Joe Biden is considering retired four-star General Lloyd Austin as his nominee for defense secretary, adding him to a shortlist that includes Jeh Johnson, Tammy Duckworth and Michele Flournoy, two sources with direct knowledge of the decision-making tell Axios.

Why it matters: A nominee for Pentagon chief was noticeably absent when the president-elect rolled out his national security team Tuesday. Flournoy had been widely seen as the likely pick, but Axios is told other factors — race, experience, Biden's comfort level — have come into play.