PARIS, 13 April 2006 — Demand for oil has tested OPEC supplies to the limit, production in some countries remains at risk from political tensions and high oil prices are now crimping demand, the IEA warned yesterday.
As oil prices pushed upward to record high levels, the IEA held to a forecast that demand would grow by 1.8 percent this year while also reporting that the oil industry was running short of equipment and expertise.
However, it revised down the actual demand growth figure to 1.47 million barrels per day from 1.49 million barrels per day because of the effect of hurricane-disrupted data in 2005 on comparative data toward the end of 2006. But the agency said: “Cold weather and supply outages lifted the first-quarter call on OPEC crude and stock-change 700,000 barrels per day above OPEC supply, pointing to a draw in first quarter global balances.” The market had focused on threats to supplies in Nigeria, Iraq, Iran and Venezuela, the report noted.
High oil prices and “revenue distribution” were partly behind problems in Nigeria and Chad, and in some other countries windfall taxes and renegotiation of extraction agreements “threatens to reduce investment, so perpetuating the upward price spiral”. Production losses in Nigeria and “concern over Iran” were “unlikely to be resolved in the near future”.
However, US refining capacity was recovering from hurricane damage and maintenance and this was lowering forward prices for gasoline, despite the approaching driving season. Nevertheless, the IEA noted: “The market is focusing on the present rather than the future.”
The International Energy Agency said in its April report: “Despite upward revisions to Saudi and Libyan capacity this month, effective spare capacity amongst OPEC members remains thin at 1.7 million barrels per day.”
The report said that supplies by the Organization of Petroleum Exporting Countries in February had been revised upward by 225,000 barrels per day on evidence of a sharp increase in exports by Iran, but that in March OPEC supplies had fallen by 215,000 barrels per day to 29.7 million barrels “on Nigerian outages and lower Iranian and Iraqi exports”.
The report also commented that damage to Iraq’s northern pipeline suggested that exports to Ceyhan were “unlikely for some time”.
World supplies of oil had fallen by 125,000 barrels per day in March to 84.5 million barrels per day.
