IEA sees global oil supply crunch risk recede

The world may escape an oil supply crisis for the next five years because a slow recovery from the economic downturn would hold down growth of demand, the International Energy Agency (IEA) said on Monday.

The IEA slashed its mid-term estimate for world oil demand, which it said may rise by an average 0,6% a year from 2008 to 2014, down sharply from its forecast of 1,6% growth made last year.

“Relative to the medium term profiles presented in previous years, this scenario paints a delayed picture of threatened ’supply crunch’ later in the projected period,” it said in its Mid-Term Oil Market Report.

That forecast was based on a world growth forecast by the International Monetary Fund (IMF). The IEA also provided a model based on a less optimistic forecast, according to which demand could actually decline.

“Whether we end up facing a supply crunch again by mid-decade, or with a more comfortable buffer of supply flexibility, depends largely on the pace of economic recovery and government action on efficiency,” the IEA’s director, Nobuo Tanaka, said in a statement.

AFP