The oil market will remain tight in the medium term, although soaring prices and slower economic growth are reducing demand rise, the International Energy Agency (IEA) said in a report released here on Tuesday.
In its annual medium-term oil market report, the Paris-based IEA said global demand for oil products will grow by an average of1.6 percent per year to 2013, from 86.9 million barrels per day this year to 94.1 million barrels per day.
It was scaled down from the agency's previous forecast issued last July, which predicted a yearly increase of 2.2 percent to 2012.
The report said high oil prices are clearly affecting consumer behavior and threatening global economic growth, therefore contributing to the downgrade in demand growth.
"With oil prices hitting 140 U.S. dollars we are clearly in the
third oil shock, with prices affecting economic growth, truck drivers are going on strike. Airlines are closing down," IEA Executive Director Nobuo Tanaka said at a press conference on the sidelines of the World Petroleum Congress.
However, the report said supply constraints, refinery limitations and continued demand growth in emerging markets will maintain pressure on the market in the medium term.
"Despite a considerable downward revision to our global oil demand forecast due to weaker economic growth projections and a doubling of oil prices over the past year, structural demand growth in developing countries and ongoing supply constraints continue to paint a tight market picture over the medium term," the report said.
Compared with its previous forecast, the IEA also made significant downward revisions to both non-OPEC supplies and OPEC capacity estimates.
Project delays remained a major factor in supply-side underperformance, with slippage estimated at up to 12 months on average for the large projects surveyed, alongside an estimated doubling of costs. The other major reason is declining output from mature oil fields.
"Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream -- to assure that the market is adequately supplied," said Tanaka.
The IEA predicted supply and demand would be close over the next five years, but they would be in a different pattern of development.
Contrary to supply, which was expected to be stronger over the next 18 months than later, demand growth would be the weakest in the first two years, building up as global economic growth strengthens from 2010 on.
This would result in a temporary rise of spare capacity to above 4 million barrels a day in 2009 and 2010, before a retreat to minimal levels by 2013.
Source:Xinhua
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