BEIRUT

International

OPEC predicts slowdown in 2013 global oil demand growth

A view of a petrochemical complex in Assaluyeh seaport at the Persian Gulf, 1,400 km (870 miles) south of Tehran. (REUTERS/Morteza Nikoubazl/Files)

LONDON: World oil demand growth will slow in 2013 from the already weak 2012, OPEC said Wednesday, citing Europe’s debt worries, a faltering U.S economic recovery and deceleration of growth in emerging markets.

OPEC, which produces a third of global oil, said healthy output levels from non-OPEC producers next year would be enough to cover the modest growth in demand without the need for OPEC itself to increase output.

“Besides the eurozone crisis, geopolitical tensions in the Middle East, the contraction of manufacturing in the U.S. for the first time since 2010 and decelerating economic growth in emerging markets have been fueling uncertainties regarding global economic growth,” OPEC said in a monthly report.

OPEC left its 2012 world oil demand growth forecast unchanged at 0.9 million barrels per day and said growth in 2013 would slow to 0.82 million bpd.

“The fact that the departure of Greece from the eurozone, with a severe impact on the eurozone economy, still cannot be ruled out remains a cause of concern,” it said.

“Such an action would provoke a massive capital outflow from the country and result in a default of its fiscal obligations, with a destabilizing effect on the eurozone and beyond,” the report added.

The group’s forecasts are close to those of the U.S. government, which Tuesday cut its global oil demand growth estimate for 2013 by 360,000 bpd to 730,000 bpd.

OPEC forecast non-OPEC supply to increase by 0.7 million bpd in 2012 and 0.9 million in 2013.

“U.S. oil supply is expected to average 10.07 million bpd in 2013, an increase of 0.37 million bpd over 2012. This increase will be the highest among all non-OPEC countries and at the highest annual level since 1986,” OPEC said.

Demand for OPEC’s own crude is expected to average 29.6 million bpd in 2013, almost 2 million below its June production levels of 31.36 million.

OPEC also cited secondary sources as saying Iranian production was down to 2.963 million bpd in June, the lowest in more than 20 decades, while Saudi Arabia had ramped output back to above 10.1 million bpd.

Average oil prices were the highest on record in 2011 and earlier this year appeared to be heading for new records due to fears over supply disruptions from Iran amid Tehran’s standoff with the West over its nuclear program.

But prices fell steeply from May to below $100 per barrel due to concerns about the global economy.

OPEC said it based its 2013 oil demand forecast on assumptions including a slowing in world gross domesticproduct growth from 2012, normal weather, flat U.S. oil demand, 8 percent growth in the Chinese economy and a slowdown in the economies of the Middle East.

If the U.S. economy grows a bit stronger next year, oil demand may grow by 1 million bpd, according to OPEC’s optimistic scenario.

The pessimistic scenario sees oil demand growing by a mere 0.65 million bpd should recovery in developed economies prove more difficult.

Analysts said they agreed with the modest oil output growth forecast from OPEC and added it would not necessarily mean depressed oil prices in 2013.

“The supply system is very close to its limits and that will not change,” David Wech from JBC Energy consultancy said.

“We see a very limited supply cushion – probably at around 1.5 to 2.5 million bpd – and that is not enough bearing in mind potential supply outages,” he said, citing Iran, Libya and Norway as recent examples of outages.

Wech predicted demand growth of 1.1 million bpd in 2013, while Seth Kleinman at Citigroup put the figure at 0.9 million bpd and analysts from Barclays at 1.16 million bpd.

“I see ample supply for the foreseeable future, but of course geopolitical developments can always cut immediate supply,” Tamas Varga from PVM brokerage said.

Goldman Sachs analysts said expectations for more monetary easing from the global central banks were also providing the upside.

“Central banks around the world continue to adopt measures to attempt to support world economic growth, and indirectly, world oil demand,” Goldman said this week.

 
A version of this article appeared in the print edition of The Daily Star on July 12, 2012, on page 5.

Recommended

Related Articles

Entities

Advertisement

Comments

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

comments powered by Disqus

Advertisement

FOLLOW THIS ARTICLE

Interested in knowing more about this story?

Click here