Opec cuts oil demand growth forecast

Opec cuts oil demand growth forecast

London: The Organization of the Petroleum Exporting Countries (Opec), source of more than one-third of the world’s oil, cut its forecast for global oil demand growth this year as a worsening economic outlook curbs consumption in developed economies.

The revision from Opec in a report on Tuesday follows reductions by other forecasters, such as investment bank Barclays Capital, as slowing growth hits consumers and businesses.

“Dark clouds over the economy are already impacting the market’s direction," Opec said in its monthly report. “The potential for a consequent deterioration in market stability requires higher vigilance and close monitoring of developments over the coming months."

World oil demand will increase by 1.21 million barrels per day (mbpd) in 2011, Opec said, 150,000 bpd less than expected last month. Growth next year was lowered only marginally, by 20,000 bpd to 1.30 mbpd.

Economic gloom has been weighing on oil prices and, officials say, causing some concern in Opec.

The weakening demand picture for 2011 could bolster the view of Iran and other price hawks within Opec, who at a meeting in June blocked a Saudi Arabia-led proposal to increase output.

After the failed meeting, Saudi Arabia and other members including Kuwait and the United Arab Emirates unilaterally increased their production, helping Opec output to rise to the highest in months.