Slow Economic Growth Lowers International Energy Agency's Projections for Oil Demand

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Researched by Industrial Info Resources India (Delhi, India)--Dimmer economic growth assumptions and low oil demand during the last quarter in the developing and industrialized economies has lowered the International Energy Agency's (IEA) demand projection for 2011 and 2012.

IEA cut its projection by 200,000 barrels per day (BBL/d) to 89.3 million BBL/d for 2011, and by 400,000 BBL/d to 90.7 million BBL/d for 2012.

As per the assumption made by the Organization for Economic Cooperation and Development (OECD), the global output growth is estimated at 3.9% in 2011 and 4.2% in 2012. Major factors include the debt crisis in Europe, the employment scenario in U.S., and high inflation in emerging economies.

Due to weaker demand, oil production seems not to be so urgent for the Organization of Petroleum Exporting Countries (OPEC) in the last quarter of 2011.

As per the projection, non-OECD oil demand has been revised down by 180,000 BBL/d to 43.5 million BBL/d this year, climbing 1.4 million BBL/d from 2010. The 2012 non-OECD demand is forecast to average 45.1 million BBL/d.

In its assessment, the IEA has slightly downgraded its growth estimate for non-OECD countries. The chief reason behind this is a weak investment sentiment prevailing in China. The IEA further assessed that oil demand had been lower for Asian and Latin American markets in June and July, which was attributed mainly to a comparatively lower growth rate due to the global economic slowdown and the current European crisis. However, this lack of demand has been slightly offset by a growth in oil demand in the Middle East and a reassessment of Libyan demand.

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