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Singapore –
Current oil prices in excess of US $ 70 / b are already beginning to weigh on global oil demand and threaten to ease expectations of demand growth this year, the agency's executive director said Friday. International Energy Federation, Fatih Birol.
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The recent rise in oil prices is weighing on demand, particularly in countries like China, the United States and India, which are the biggest oil consumers in the world, said Birol.
"The rise in oil prices could, if it stayed around that level, also have an impact … put downward pressure on the growth of demand," Birol told S & P Global Platts in an interview.
"So it will not be a surprise if we revise our demand figures in the next edition of the oil market report if prices remain at these levels."
In its latest monthly report on the oil market released this week, the IEA has maintained its estimates of global oil demand growth in 2019 at 1.4 million barrels a day, compared with 1.3 million barrels a day. per day in 2018.
But oil prices have jumped more than 40% since the end of December, the January Brent ICE trading to a record high of over $ 71 / b, and supported by production cuts and breaks supply of OPEC / non-OPEC in Venezuela and Iran.
Rising oil prices could begin to threaten oil demand in Asia, particularly in a country like India, which is beginning to feel the effects more than others, Birol said.
India imports nearly 80% of its crude oil requirements, and soaring retail oil prices in the country increase inflation and worsen its fiscal difficulties.
"This will certainly hurt oil demand if it soared particularly in demand growth centers, such as India," Birol said. "This could have consequences for demand growth centers around the world."
China's slowdown
The growth in US oil demand, in particular, may not be as strong this year as in 2018 in the current oil price environment, said Birol.
"The United States was not just the first growth in oil production, [also] the number one growth for oil consumption, "he added.
The risk of a price impact on oil demand is exacerbated by the more general signs of a global slowdown in economic growth, with Chinese indicators pointing to the weakest growth of the past three decades, said Birol.
"Remember that China is responsible for half of the growth in global oil demand over the last 20 years, so it could have an effect … on the prospects for oil demand," he said. -he declares.
Earlier in the week, OPEC's research and badysis group was even more pessimistic than the IEA, warning of slower growth in demand and lower estimate of global demand growth of oil from 30,000 b / d to 1.21 million b / d due to "slowdowns". economic activity than expected. "
The US Energy Information Administration announced Tuesday that global consumption is expected to increase by 1.4 million barrels a day this year to reach an average of 101.38 million barrels per day.
Uncertainties of supply
Birol said, however, that supply risks due to geopolitical uncertainties in countries such as Venezuela, Iran, Libya and Algeria made him "nervous".
"Some developments in these countries [have] implications [for] oil markets and that could well drive up prices if such developments occur, "he said.
Production in Venezuela has fallen dramatically as the regime of Nicolas Maduro is subject to pressure from US sanctions and many power cuts fueled by the growing economic crisis in the country. Iran, which is also subject to US sanctions, has seen its production decline steadily over the past seven months.
The third largest producer in Africa, Libya, is entering a new phase of armed conflict because of the escalation of violence between two rival political factions.
There is also concern that Algeria may have a smooth political transition following the resignation of President Abdelaziz Bouteflika a few weeks ago.
Earlier in the day, Birol met with Japanese Prime Minister Shinzo Abe. He said the "government is waiting for our contribution to the preparation of a major report on hydrogen to be a key topic for the G20 meeting in Japan".
"This hydrogen report will look at how we can use renewable energy and the natural gas system to solve energy and environmental security problems," he added.
Japan hosts the G20 summit in Osaka on June 28-29, following the Ministerial Meeting on Energy Transitions and Global Environment for Sustainable Growth on June 15-16 in Karuizawa, Nagano Prefecture.
–Takeo Kumagai, [email protected]
–Eklavya Gupte, [email protected]
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