The IEA has agreed with the US government and OPEC, who forecast that global oil demand growth will fall in 2013, despite the low levels of growth this year due to the slowdown in economic activity.
The IEA also predicted that oil prices will remain high, despite the weak economy, due to geopolitical tensions between the West and Iran, as well as general political tensions around the whole of the Middle East and Africa region.
“The geopolitical dimension is likely to continue to provide something of a floor for prices. The issue of Iran will likely continue to weigh heavy on the market through the second half of 2012. Moreover, there is a risk that recent progress in restoring output from Libya, Iraq and Nigeria could be jeopardised if recent political and civil tensions worsen.”
Initial IEA forecasts for oil demand growth in 2013 was at 980,000 barrels per day, however that has been reduced by 130,000 bpd to 830,000 bpd, less than the 870,000 bpd growth of 2012.
Another reason for the revision is “the latest Chinese data, which reveals a sharp deceleration in momentum compared to the double digit expansions seen at the beginning of 2011.”
Having said that, the IEA does believe that imports of Iranian oil by major consumers will increase, starting this month. They obviously have great faith in the US and EU sanctions ability to keep countries from trading with Iran.
“There is scope for imports from Iran to recover modestly from September onwards, albeit we retain our existing assumption that around 1 million bpd of Iranian oil may struggle to find buyers in the second half of 2012.”
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com