IEA head worried by oil price surge

International Energy Agency (IEA) Executive Director Nobuo Tanaka is worried by the rapid increase in oil prices. Crude oil futures surged to a 2009 high above USD 75 a barrel on 14 October, boosted by optimism about a global economic rebound. “The rapid hike of the price is certainly a concern,” Reuters quoted Tanaka as telling a news conference on the sidelines of the IEA’s biennial ministerial meeting in Paris on 14 October.
“We have increased our predictions for demand... but data from the field is not that promising. We are watching carefully how the real economy is moving in (Organization for Economic Co-operation & Development) countries as well as emerging countries,” he added.
The IEA, which advises 28 industrialized economies, said two weeks ago that faster economic growth next year, particularly in the developing world, will drive oil demand higher than previously expected. It said crude demand would reach 86.1 million barrels a day in 2010, up 1.7% from this year. That’s up from the IEA’s forecast last month for oil demand of 85.7 million barrels a day in 2010. The IEA said “buoyant economic activity in more oil intensive emerging countries” was largely the cause of its revision. It also noted the International Monetary Fund’s move to hike its forecast for economic growth next year to 3.1%, up from its April forecast of 1.9% growth. The agency said, however, that “the outlook for 2010 is still fraught with uncertainty,” and said 2010 oil demand could be significantly lower if economic growth next year is less than forecasters now project.
On 13 October, the Organization of the Petroleum Exporting Countries (OPEC) also raised its forecasts for world demand, based on forecasts of global economic recovery. In its monthly oil report, the Vienna-based organization said demand would average 84.93 million barrels of crude oil per day, 380,000 barrels above its previous estimate. One barrel equals 159 litres. This 0.83% increase forecast for next year is based mainly on expected demand growth in China, India, Latin America and the Middle East. Industrialized countries are seen as requiring 0.32% less oil than in 2009. The oil cartel raised its demand forecast for 2009 by 180,000 barrels per day to 84.24 million barrels per day. In September, the 12 OPEC countries pumped 28.9 million barrels per day, 43,000 barrels more than in August, owing mainly to higher production in Nigeria and Angola.
On 14 October, Tanaka also said the economic crisis was an opportunity to reach an agreement at the Copenhagen summit on climate change in December, but added he was still unsure about the outcome of the summit. “Usually, the real outcome in negotiations comes out at the last minute, so we don’t know. We feel this economic crisis provides a window of opportunity to move towards a successful conclusion in Copenhagen,” he said. “Luckily, the slowdown of economic activity created a drop in [carbon dioxide] emissions which is the first time since World War II... So we are cautiously optimistic (for the summit’s outcome).”