A continuing massive stock overhang could contribute to more volatility in the oil price over the coming months, says energy and commodities company Vitol global analyst Simon Warren.

He told delegates at the yearly conference of the African Refiners Association (ARA), in Cape Town, that, despite a cut in production by Organisation of the Petroleum Exporting Countries (Opec) members last year, there had been an increase in commercial stocks over the past couple of months.

“Demand has been very strong. Iranian sanctions were lifted and they followed through with much bigger exports. Iraq has recovered . . . It’s starting to get its act together and Opec countries themselves have had a big impact on the market.”

Rapid, uncontrolled supply growth led to an Opec cut last year. Opec and non-Opec producers reached a deal in December to jointly curtail output by about 1.8-million barrels a day.

Warren said global economic growth last year was the slowest since 2009, although signs for 2017 look better.

“Most demand growth is coming from commodity exporters. It’s coming from China, Europe and North America. There’s been a retraction in demand growth from Africa.”

Warren said China and India accounted for half the world’s demand growth.

“It’s likely we’re in for a period of more price volatility. It’s all up to Opec to see how they respond.”

With more than one-billion cars on the road throughout the world – and climbing – more than 80% of global demand growth was being driven by the transport sector.

Warren said petrol was having a stellar performance, having rebounded from its 2016 weakness. Demand for liquefied petroleum gas also remained strong. “It’s the strongest product in terms of growth in percentage terms,” Warren told about 500 delegates at the ARA conference.

On the shipping front, Warren said liquefied natural gas was making “very little impact”. It was limited to speciality ships like cruise ships. The tightening of marine bunker fuel specifications and a move to low sulphur would, however, ring the changes for the some 60 000 ships worldwide.

“The limited availability of scrubber implies the need for a new, replacement fuel, which is likely to be a blend of low sulphur fuel oil/gas oil,” suggested Warren.

Warren said that, despite an increasing interest in battery-powered vehicles, the battery car market was small, making up only a tiny part of the global fleet.

On the refining front, new capacity overwhelmingly favoured sour or heavier crude, with most growth happening in Asia.