Oil production world-wide will rise more slowly than previously predicted over the next five year according to the latest forecast from the International Energy Agency. That means there will be little spare capacity on the market despite weakening demand growth.
The IEA, which advises 27 industrialised countries on energy matters, said output this year should be 90.3 million barrels per day with demand at 86.9 million barrels. Output in 2013 will be 96.2 million barrels and demand 94 million.
The IEA’s Executive Director, Nobuo Tanaka, said this is reminiscent of the 1973 and 1979 oil crises: “With oil prices hitting $140 per barrel, we are clearly in the third oil shock; a time when high oil prices are starting to hit global economic growth.”
Traders said high oil prices – up more than 40% so far this year – have been eroding fuel demand especially in the United States, the world’s largest oil consumer. The US government said this week that domestic oil demand in April was the lowest for that month since 2002.
Saudi Arabia’s has again said it is willing to provide as much crude as its customers need but will not cut its prices.