We won’t be using as much oil as was first thought this year or next. The International Energy Agency has trimmed its forecast for world demand.
The IEA, which is the industrialised countries’ energy watchdog reckon the demand for crude will drop by as much a 100,000 barrels a day next year.
The weak global economy and the impact of Hurricane Sandy were cited as two reasons behind the drop while the report added that, “rarely have so many things gone wrong in the oil patch at the same time.”
The report follows the agency’s prediction the US would overtake Saudi Arabia as the world’s largest oil producer by 2017.
It points out the production boost in the US has been made possible by new technologies helping oil, shale gas and bioenergy production.
The forecast could have huge geo-political implications for some countries especially China.
“It’s actually going to make it possible for the U.S. to pay less attention and actually foot less of the bill for protecting Middle Eastern oil supply and basically, in effect, say to China and other countries hey you guys are the big consumers now you guys have to step up and do your part,” explained Mike Wittner, Global Head of oil research at Societe Generale.
The report also predicts renewable power will become an indispensable part of the global energy mix by 2035, generating almost one-third of electricity on the planet the same amount as from coal.
It stresses there will have to be careful energy management for such a forecast to become a reality.