IEA cuts oil de­mand fore­casts, but sees prices stay­ing high

Muscat Daily - - BUSINESS -

Lon­don, UK - The In­ter­na­tional En­ergy Agency (IEA) cut fore­casts for oil de­mand this year and next be­cause of grow­ing threats to global eco­nomic growth, yet warned that dwin­dling spare oil sup­plies will keep prices high.

Re­duced growth es­ti­mates from the In­ter­na­tional Mone­tary Fund, trade dis­putes and the strain of high oil prices all fed into the down­grade to con­sump­tion, the Paris-based IEA said in its monthly re­port. Yet as sup­ply losses deepen in

OPEC mem­bers Venezuela and

Iran, the level of spare pro­duc­tion ca­pac­ity left else­where amounts to just two per cent of global de­mand and will likely shrink fur­ther, it said.

‘Ex­pen­sive en­ergy is back’ and ‘it poses a threat to eco­nomic growth’, said the IEA, which ad­vises most ma­jor economies. ‘For many de­vel­op­ing coun­tries, higher in­ter­na­tional prices co­in­cide with cur­ren­cies de­pre­ci­at­ing against the US dol­lar, so the threat of eco­nomic dam­age is more acute’.

Oil climbed to a four-year high above US$85 a bar­rel in Lon­don last week on con­cern that loom­ing US sanc­tions on Ira­nian crude ex­ports will leave mar­kets short of sup­ply later this year.

The IEA cut its es­ti­mate for global oil-de­mand growth for both 2018 and 2019 by about 110,000 bar­rels a day to 1.3mn and 1.4mn bar­rels a day re­spec­tively. The re­vi­sion also re­flected changes in the way the agency as­sesses Chi­nese con­sump­tion. Both global de­mand and sup­ply are close to hit­ting 100mn bar­rels a day for the first time.

The lat­est re­port showed that Saudi Ara­bia and other key na­tions in the Or­ga­ni­za­tion of Petroleum Ex­port­ing Coun­tries are al­ready de­liv­er­ing to make up for fel­low mem­bers who are suf­fer­ing losses. Pro­duc­ers in the so-called OPEC+ coali­tion, which also in­cludes Rus­sia, have added 1.6mn bar­rels a day since May, the re­port showed. As a re­sult, in­ven­to­ries have been re­plen­ished and it ap­pears ‘that the oil mar­ket is ad­e­quately sup­plied for now’, the agency said.

The amount avail­able will al­most cer­tainly be tested in the com­ing months as US sanc­tions take ef­fect on Iran, which has al­ready seen sup­plies fall to the low­est in more than two years, ac­cord­ing to the re­port.

‘This strain could be with us for some time and it will likely be ac­com­pa­nied by higher prices, how­ever much we re­gret them and their po­ten­tial neg­a­tive im­pact on the global econ­omy’.

Both global de­mand and sup­ply are close to hit­ting 100mn bar­rels a day for the first time

Newspapers in English

Newspapers from Oman

© PressReader. All rights reserved.