PARIS, 12 August 2003 — The world oil market remains tight despite a small increase in Iraqi output, the International Energy Agency said yesterday, raising its forecast for 2003 world demand by 10 percent owing to growth in China. The Paris-based IEA raised its forecast for growth of demand this year by 100,000 barrels per day to 1.11 million barrels, noting that pressure was growing on OPEC ministers to increase their oil production.
The report painted a picture of firming demand led partly by consumption in the United States. It also indicated that OPEC, which accounts for about a third of world oil production, had contributed only about 17.0 percent of an increase in world supply in July. The report also noted that reserves of oil in leading consuming nations were depleted, signs of rising output by Iraq, and recovery of the economy in China from the effects of the SARS respiratory disease.
With a rally in crude oil prices at the end of July, OPEC’s price basket had already spent much of the month near the top of its target range, it noted. “Prices continue to be supported by low stocks, stronger economic growth, a pick-up in US gasoline demand and the uncertainty over Iraqi supplies ahead of an anticipated seasonal rise in demand,” the agency said in its report.
Two factors drove the upward revision in global growth demand this year: Chinese economic recovery and a revision of oil market data from countries outside the 30-member OECD. The expected rise in consumption mainly reflects “a greater-than-expected bounce in Chinese demand in the aftermath of the Severe Acute Respiratory Syndrome outbreak offsetting downward adjustments in North America,” the agency said. It said it had also had to make big revisions of data from outside the Organization for Economic Cooperation and Development, which groups the world’s leading industrialized nations.
The IEA said that in 2001 non-OECD countries had been using 260,000 barrels per day more than it had previously calculated. Most of this revision concerned India and Iran. The IEA held unchanged its forecast that global demand for oil in 2004 would grow by 1.05 million barrels per day
World demand for oil in 2003 would total 78.4 million barrels per day, it said. This is 400,000 barrels per day more than the IEA had signaled in July. It put global demand in 2004 at 79.4 million barrels, compared with its estimate last month of 79.1 million barrels.
Meanwhile, supplies remained tight. Total inventories by OECD consumer countries had remained 129 million barrels below the level of June 2002. Deliveries in July contracted in the United States, the world’s biggest oil consumer. North American demand fell on a 12-month basis but was poised to lead the growth of demand in the OECD area for the rest of this year, as it had done for most of the first half. “Recent economic indicators confirm signs of a pickup in the pace of US economic recovery,” it said.