By Christopher Alessi 
 

LONDON--The United States, Russia and Saudi Arabia--the world's three biggest oil producers--are churning out crude at record levels, causing global supply to significantly outstrip demand, the International Energy Agency said Wednesday.

In its closely watched monthly oil market report, the IEA said oil output from the top producers is holding global supply steady, at around 100.7 million barrels a day last month. That's 2.6 million barrels a day higher year-on-year.

Since May, global oil output has climbed by 1.8 million barrels a day, with the U.S. providing 1 million barrels a day of growth and Saudi Arabia and Russia adding 620,000 barrels a day and 445,000 barrels a day, respectively, the agency said.

The IEA, a Paris-based organization that advises governments and corporations on energy trends, noted those gains were more than offsetting output reductions from Iran due to U.S. sanctions and supply outages in Venezuela.

In October, Saudi Arabia's oil supply rose month-on-month to 10.65 million barrels a day, while Russian crude and condensate production soared to 11.4 million barrels a day, according to the report. The agency said that preliminary data for the U.S. showed output rose sharply last month, potentially rising to 11.6 million barrels a day in early November--solidifying its spot ahead of Russia as the world's largest producer crude.

In its annual World Energy Outlook report Tuesday, the IEA predicted relentless shale growth in the U.S. could allow the country to leap frog the world's other major producers, accounting for roughly 75% of global oil growth by 2025.

The report comes as crude prices have plummeted more than 20% since four-year highs reached at the start of October, falling into bear-market territory. The slide was a response to rising supply, weakening global economic growth that investors fear could weigh on oil demand and a U.S. decision to grant waivers to major buyers of Iranian crude following the enactment of sanctions on Iran's oil industry at the start of the month.

The price drop prompted the Organization of the Petroleum Exporting Countries--de-facto led by Saudi Arabia--and its allies outside the cartel, including Russia, on Sunday to signal a strategy shift that could include a joint production cut. The move comes just months after the group's decision to begin ramping up production after more than a year of holding back output.

Saudi Arabia on Sunday said that it would unilaterally slash its net exports next month by around 500,000 barrels a day compared with November levels.

The announcement initially helped crude prices to climb out of the red Monday morning before again coming under pressure after President Donald Trump put out a tweet calling on Saudi Arabia and OPEC not to cut production. Prices were further weighed down Tuesday after OPEC, in its monthly oil market report, lowered its demand forecasts for this year and next.

Brent crude closed down 6.6%, at $65.47 a barrel, Tuesday.

The IEA on Wednesday kept its demand outlook largely unchanged from last month's report, saying it expects demand to grow by 1.3 million barrels a day in 2018 and 1.4 million barrels a day in 2019.

Write to Christopher Alessi at christopher.alessi@wsj.com

(END) Dow Jones Newswires

November 14, 2018 04:14 ET (09:14 GMT)