Paris: Recovery in the world’s biggest economies could be jeopardized if crude oil prices stay over $80 (Rs3,568) per barrel, the International Energy Agency (IEA) said Tuesday.
IEA also reported that the Organization of the Petroleum Exporting Countries (Opec) posted the first “significant drop” in output in March in more than a year—falling 190,000 barrels per day (bpd) to 29 million bpd—largely due to a nearly 10% drop in Iraqi output.
The agency, the energy arm of the Organization for Economic Co-operation and Development (OECD), a grouping of the world’s richest nations, said concerns remain that global oil markets are “overheated”, with crude around $85 per barrel.
“Ultimately, things might turn messy for producers if $80-100 (per barrel) is merely seen as the new $60-80 (per barrel), stunting economic recovery while prompting resurgent non-oil and non-Opec supply investment,” the Paris-based IEA said in its monthly oil market report.
Rising requirements: IEA has estimated global demand in 2010 for crude oil to rise by 30,000 barrels per day (bpd) to 86.6 million bpd. Bloomberg
Price subsidies that benefit consumers in non-OECD countries such as China and India, and tighter credit than two years ago “could stall OECD economic recovery or render it more oil-less than we currently envisage”, it said.
IEA said operational problems and weather-related export disruptions at its southern terminals drove down Iraqi output by 220,000 bpd last month. But the agency noted that Iraq’s exports hit a two-decade high of 2.07 million bpd in February, and total exports in March were tallied at 1.79 million bpd.
IEA estimated global demand in 2010 would rise by 30,000 bpd in 2010 to 86.6 million bpd compared with last month’s report. Demand for 2009 was revised down by 70,000 barrels to 84.9 million bpd.
The agency said Opec kept its output targets unchanged last month largely on expectations that global oil demand will pick up later this year to absorb above-target production.
Oil prices have been hovering around 18-month highs of $80-85 per barrel. The international oil cartel is not expected to meet again until 14 October in Vienna.
Qatar’s oil minister had said last week that crude’s recent rally is driven mainly by speculation, not a shortage of supply, and dismissed the likelihood that Opec would hold a special meeting to re-evaluate current production.