IEA bucks trend, slashes forecast for 2014 world oil demand growth

london — World oil demand will rise less than previously thought in 2014, the International Energy Agency, or IEA, said on Friday, due to a lower outlook for Russia’s economic growth following its annexation of Crimea.

The agency, which advises industrial countries on oil policy, also reduced its forecast for non-Opec supply this year, which will increase the need for crude from the Organisation of the Petroleum Exporting Countries.

Global demand growth will average 1.29 million barrels per day in 2014, the IEA said in its monthly Oil Market Report. That is 60,000bpd lower than its previous forecast.

“Downward adjustments to the forecast of Russian oil demand for 2014 helped trim the global demand growth estimate,” the report said. “Developments in Crimea have weakened Russia’s macroeconomic outlook.”

The Paris-based IEA is the only one of the three main government oil forecasters to trim its 2014 demand growth projection in reports this week.

Its view follows lowered Russian economic growth outlooks from the International Monetary Fund and World Bank. Brent crude edged down after the report’s release.

The IEA lowered its view on 2014 supply from non-Opec countries, which pump about three in every five barrels. The agency now expects supply outside the Opec to rise by 1.5 million bpd this year, 250,000bpd less than it projected last month.

Accelerated rates of decline at older Russian oilfields accounted for part of the reduced supply forecast as did a lower estimate for Kazakhstan, where the giant Kashagan oilfield may fail to restart this year.

“While non-Opec supply growth is still forecast to be the highest in decades, expectations are being toned down somewhat,” the report said.

Supply from the Opec declined by 890,000bpd in March to 29.62 million bpd, according to the IEA, which said the group would have to pump more in the second half of the year.

“The Opec, far from facing a supply glut, will have to raise production from March levels,” the IEA said.

In reports issued this week, the Opec left its 2014 demand growth projection unchanged at 1.14 million bpd, while the US government’s Energy Information Administration raised its forecast by 10,000bpd to 1.23 million bpd. —