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London - Sky-high oil prices are beginning to dent oil demand growth, the International Energy Agency (IEA) said on Tuesday, adding that prices could ultimately moderate through a global economic slowdown.
“Most analysts see a more formal Opec policy response as
unlikely... That leaves a less palatable route to price moderation, namely
economic slowdown and weaker demand growth,” the agency said in its monthly
report.
“There are real risks however that a sustained, $100 per
barrel plus price environment will prove incompatible with the currently
expected pace of economic recovery,” it said.
The agency said preliminary data for January and February
suggested that high oil prices may have started to dent demand growth.
It however kept its 2011 global oil demand growth forecast
unchanged at 1.4 million barrels per day or 1.6%.
The IEA said tight global supply was another major concern,
as the global oil output fell by around 0.7 million barrels per day in March to
88.27 million bpd due to the Libyan civil war.
Opec crude supply alone fell by 0.88 million bpd.
“Hypothetically, if global supply were to chug along at
March levels for the rest of 2011, OECD (Organisation for Economic Cooperation
and Development) inventory could slip to near five-year lows by December,” it
said.
However, the IEA said it believed Opec spare capacity stood at a comfortable level of 3.91 million bpd, with Saudi Arabia accounting for 3.2 million alone.
