Paris-based International Energy Agency (“IEA”) has raised its 2010 and 2011 world oil demand outlook, citing the impact of buoyant global economic growth and frigid weather conditions in the northern hemisphere. In a report, the energy-monitoring body of 28 industrialized countries estimated that global oil demand would increase by 1.6% (or 1.4 million barrels per day) annually, reaching 89.1 million barrels a day in 2011 from last year’s 87.7 million barrels a day.
IEA’s latest monthly ‘Oil Market Report’ is based on expectations of higher-than-expected oil consumption in the OECD countries, an organization of developed nations. The energy agency’s current estimates for 2010 and 2011 are higher by 320,000 barrels a day from its last report, issued in December 2010.
IEA further pointed out that growth in oil demand in 2010 has seen one of the strongest in three decades, although from a low crisis level, with a yearly spike of 3.2% (or 2.7 million barrels per day) to average 87.7 million barrels a day.
At the same time, the IEA warned that oil prices – which have rallied to nearly $100 per barrel on the back of strong demand expectations – need to cool to facilitate the economic recovery. According to the agency, which represents the world’s main energy consuming nations, recent price levels already pose a real economic threat, a deep worry for both producers and consumers.
IEA’s report has put pressure on the Organization of the Petroleum Exporting Countries (“OPEC”), the oil producers’ cartel – an intergovernmental organization that supplies around 40% of the world’s crude – to lift its production ceiling and increase supply to tackle the galloping growth in oil demand, or risk high prices that could spoil the economic recovery.
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