IEA downgrades oil demand expectations

The International Energy Agency (IEA) recently lowered its oil demand forecast in its latest monthly report because oil consumption in the fourth quarter of 2011 fell for the first time since the end of the credit crisis. The slowdown in the growth of oil demand has surpassed the expected reduction in the economy.

In the fourth quarter of last year, the daily demand for oil fell by 300,000 barrels compared with the same period of last year, which was beyond the expectation of the IEA. The IEA predicted that oil demand will increase slightly in the fourth quarter, but due to factors such as mild weather, economic downturn and high crude oil prices, oil demand in the current quarter has declined for the first time since the third quarter of 2009, the most severe period of the Great Recession.

The IEA warns that even if the global economy does not decline, the possibility of a sharp slowdown

Gradually increase, in view of this, the 2012 oil demand is most likely to face zero growth.

The IEA also reminded that the oil supply faces many risks, especially the imminent sanctions imposed on Iranian crude oil exports, which may cause European oil refineries to bring about huge oil supply shortages. However, the IEA also pointed out that until the middle of this year, Western countries’ sanctions on Iran are unlikely to have a substantial impact, and the relevant sanctions are likely to be flexible enough to avoid a fierce reaction from the oil market.

The IEA lowered its forecast for daily oil demand in the first quarter of 2012 by 500,000 barrels. The reason is that European economic issues and tensions between Iran and Western countries have led to high oil prices.

No less. The IEA lowered its 2012 oil demand growth forecast by 200,000 barrels per day to 1.1 million barrels. The agency said that the latest economic forecasts to be issued by the International Monetary Fund (IMF) and other agencies indicate that the economic growth rate will further slow down.

From the current forecast of IEA, the oil market in 2012 will achieve a nearly perfect balance between supply and demand. According to the IEA, the global demand for crude oil from the Organization of Petroleum Exporting Countries (OPEC) is exactly the 30 million barrels per day limit reached by the organization in December last year. The IEA also said that almost all of the increased oil demand in 2012 will be met by increased production by countries other than OPEC.