IEA cuts world oil demand growth by most in 7 years

LONDON (Reuters) – World oil demand will rise much less than expected in 2008 because of slower economic growth in the United States and elsewhere, the International Energy Agency (IEA) said on Friday.

The cut to demand growth is the IEA’s biggest since 2001 and follows the release of lower economic growth forecasts by the International Monetary Fund (IMF) this week, and the impact of high oil prices above $110 a barrel.


“The latest GDP projections from the IMF suggest less robust oil demand growth in the coming months,” the IEA said. “This report projects April and May oil balances tipping towards a supply surplus.”

Global oil consumption will rise by 1.27 million barrels per day (bpd) in 2008, 460,000 bpd less than the previous forecast, said the IEA, adviser to 27 industrialized countries, in its monthly Oil Market Report.

Even though demand is expected to be lower, supply is also rising less than forecast, which could help to keep prices high. The agency cut its forecast for supply outside the Organization of the Petroleum Exporting Countries (OPEC).

Reuters