Paris: The International Energy Agency (IEA) cut its world oil demand forecast for 2013 on Tuesday on continuing fragility in the world economy despite signs of recovery in China and the United States.
The IEA said the marginal cut of 85,000 barrels a day (bpd) was in line with the prospect for slower economic growth forecast by the International Monetary Fund, which last month cut its world growth estimate for 2013 to 3.5% from 3.6%.
The agency now forecasts oil demand of 90.7 million barrels per day (mbd), with the euro zone and Latin America accounting for much of the revisions.
“The reduction in the IMF economic outlook for Europe seems particularly ominous,” the agency said in its monthly report on the world oil market, in part because of “the sheer size of the region’s economic footprint”.
Oil demand across Europe is now forecast to decline 260,00 bpd, or down 1.9%, instead of 235,000 bpd lower as forecast earlier.
The IEA said world oil supply hit 12-month lows in January, down 100,000 bpd on a monthly basis to 30.34 mbd, despite higher production from Saudi Arabia and Kuwait.
Sanctions by the west on Iran succeeded in slashing Iran’s oil export revenue by $40 billion in 2012, the agency said, as production last month hit a three-decade low point.
The IEA said Iranian oil output fell to 2.65 mbd in January, down from the 3.7 mbd in late 2011 before the sanctions imposed on the Islamic Republic by the US and European Union took effect.
“Iranian crude oil production continued to edge lower in January and may fall further in coming months following implementation on February 6 of additional sanctions by the US,” the IEA said in its monthly report on the world oil market.
The latest sanctions are part of US legislation adopted last summer and “effectively bar Iran from repatriating earnings from its oil exports, depriving Tehran of much needed hard currency,” the agency said.
The US Treasury said earlier this month that countries continuing to buy Iranian oil would have to retain their payment for the oil, and allow it to be used only for Iranian purchases of goods from them.
That has apparently succeeded in tightening Tehran’s ability to freely use the money it gets from oil exports, which have already been sharply constricted by international sanctions on the country.
The move on oil revenues came six months after the US said it would deny access to the US financial system to countries buying Iranian oil, with certain countries given exceptions to wind down their trade.