The International Energy Agency, an adviser to oil-consuming nations, cut five-year forecasts for global crude demand because of the economic slump, predicting consumption won’t be at last year’s levels until 2012.
The IEA cut its oil demand estimates for every year through 2013 by about 3 million barrels a day, it said in its Medium- Term Oil Market Report on Monday. Consumption will average 86.76 million barrels a day in 2012, the first year it will rise above 2008’s level of 85.76 million barrels a day, according to the Paris-based agency.
“The deep economic recession that has spread worldwide in the past year has taken a severe toll on oil demand,” the IEA said in the report, updating estimates made in December. “This marks a break after several years of strong oil demand growth.”
The worst global economic crisis since World War II has reduced oil demand in developed economies and slowed growth in China and India. The drop in oil consumption has postponed the threat of a potential supply shortfall, the IEA said.
“Relative to the medium-term profiles presented in previous years, this scenario paints a delayed picture of threatened ‘supply crunch’ later in the period,” the group said in the report.
Oil demand in 2014 will rise to 88.99 million barrels a day, according to the IEA. From 2009, when oil demand will fall the fastest since the early 1980s, that represents an average annual increase of about 1.4 percent, or 1.2 million barrels a day. From 2008 levels it represents an average increase of 0.6 percent, or 540,000 barrels a day.
The IEA’s oil demand estimates reflect a “higher GDP scenario” based on the International Monetary Fund’s forecasts for global economic growth made in April. The IMF expects world economic expansion to reach nearly 5 percent a year between 2012 and 2014, the IEA said.
In its “lower GDP scenario,” which assumes that a rebound in the global economy will be 3 percent a year, the IEA said global oil demand could fail to reach last year’s levels by 2014, standing at 84.92 million barrels a day, 6.34 million barrels less than predicted in December.
“Many see the lower variant, or something close to it, as a more likely outcome, so profound could be the fallout from the recent financial and economic market turmoil,” according to the report.
Supplies of oil from outside OPEC are forecast to decline by 0.4 million barrels a day between 2008 and 2014, compared with six-year growth of 1.5 million barrels a day forecast in the last report, the IEA said. The outlook was cut as lower exploration and production spending delays projects.
Demand for OPEC crude will rise to 31.45 million barrels a day by 2014, up from 27.68 million barrels a day this year, the report said.
This is the IEA’s fifth Medium-Term report, a publication introduced as a bridge between the agency’s monthly reports, which give two-year forecasts, and its annual world energy outlook, which has 25-year projections.
