The International Energy Agency (IEA) has revised the 2007 world oil demand, increasing the estimate by 150 kb/d to 85.8 mb/d. The IEA states that demand forecasts for 2008 are slightly higher, yet the Organization of Petroleum Exporting Countries (OPEC) has refused to increase oil outputs despite pleas from IEA and world leaders.
According to the IEA report issued Jan. 16, 2008, the hike in demand is based on stronger-than-expected deliveries in Asia and the Middle East, as well as poor developments in the globalization of the economy.
The report indicates that the 2008 demand remains "virtually unchanged" at 87.8 mb/d.
The report shows that for December world oil supply averaged 87.0 mb/d, up 870 kb/d from November on increases in OPEC-10, North America, the FSU, Brazil, and China.
U.S. President George Bush made a plea to OPEC for an increase in oil output during his trip to the Middle East in mid-January. Last summer, the IEA made a similar request, as did the Energy Information Administration.
At the time, long before Bush's trip to Saudi Arabia where his plea was made, the head of the IEA said that "OPEC needs to raise its crude oil output in the coming months to ensure an adequate supply."
OPEC responded by claiming that the oil market remains "well supplied" and an additonal supply is not needed. The OPEC statement released last summer is much the same as the one Bush received in January 2008.
OPEC Secretary General Abdullah al-Badri said Jan. 16, 2008 that there is no need for OPEC to increase oil output. He said in a statement issued to AFP that high oil prices have little to do with demand and more to do with political tensions in non-OPEC countries and the plummeting value of the U.S. dollar, among other things.
"OPEC is constantly monitoring the oil market and if at any time fundamentals justified such a move, the Organization stands ready to raise production," said al-Badri. "I would like to reiterate that this price trend is a consequence of persistent geopolitical tensions, the weakening of the U.S. dollar, ongoing limitations and restraints in the U.S. refining system, and the increasing role of speculators in the oil market."
In a phone interview with Dow Jones, Libya's top oil official agreed with OPEC, saying that consumers have enough supply and that the price of crude is already dropping.
As if to corroborate that statement, the IEA report shows that the global supply in the fourth quarter was indeed more than 1.0 mb/d higher than a year earlier, though it averaged at or below levels of a year ago in the previous three quarters.
All eyes will be on OPEC Feb. 1 when the group will meet in Vienna to review its production policy.
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