IEA sees record growth in oil demand

PARIS, July 11: Global economic recovery and emerging markets led by China will boost growth of oil demand to a record high total next year, the IEA forecast on Thursday.

Next year, consumption by emerging markets will dominate demand overall, a position they should hold in perpetuity, the International Energy Agency said.

But the IEA monthly report stressed that the oil market is heading into a sea of many uncertainties8, partly because oil production in the United States is set to grow strongly.

Supply from other countries outside the Organization of Petroleum Exporting Countries (OPEC), notably Brazil, Kazakhstan and South Sudan, would also rise and was set for a 20-year record, the agency forecast.

For this year, because unseasonally cold weather had caused a big increase in demand for heating oil in the northern hemisphere in the second quarter, the agency raised its estimate for global demand by 215,000 barrels per day (bd).

This took the overall estimated annual growth to 930,000 bd, and total consumption to 90.8 million barrels per day (mbd).

The IEA estimates show demand rising by a further 1.2 mbd next year to 92m barrels per day, a new record after record demand also this year.

Regarding supply, upheaval in the Middle East and North Africa remains an overarching concern, the IEA warned.

Emerging markets and developing economies are forecast to lead demand growth in 2014, the IEA said.

The growth of demand from countries outside the 34-member OECD had slowed from the heady pace of recent years1 but would climb above total OECD demand in the second quarter of 2014, the agency said.

Unrest in Egypt, Syria, worries oil market

The IEA said that the United States would play a role in an expected steep increase in global refining activity in the third quarter of 2013.

OECD demand would fall by 0.8 per cent this year and 0.4pc in 2014, on the basis that OECD economies will on average return to growth in 2014.

The IEA said that oil prices had risen recently because of concerns that unrest in Egypt could affect supplies via the Suez Canal and the SUMED pipeline which runs from the Gulf of Suez to the Mediterranean Sea.

Observers worry that the political confrontation in Egypt, like the Syrian civil war, could drag on and worsen before it gets better, and the instability could theoretically threaten production and transit through the Suez Canal, the IEA said.

Unrest had also disrupted supplies from Libya, Nigeria and Iraq.

Another factor was temporary disruption of some supply routes within the United States.AFP