LONDON - World oil demand is shrinking more quickly than first thought due to weak consumption in some major consuming countries, the International Energy Agency's head said on Monday.
The IEA may cut its forecast for world oil demand growth further, said Nobuo Tanaka, executive director of the agency which advises 27 industrialized countries, during the Reuters Energy Summit.
He also conceded that a forecast of around 100 million barrels per day (bpd) for oil supply in 2030 was "more reasonable" than a higher IEA estimate which some industry officials doubt can be achieved.
"We are saying that we may see a further demand slowdown for the June report," Tanaka said. "How much, I don't know."
"We think yes the demand is slowing, especially in OECD countries."
A further cut to 2008 demand would follow evidence that record prices are slowing oil use in the industrialized world. Further pressure could come as other countries, such as Indonesia, raise domestic fuel prices.
The IEA, whose forecasts are an industry benchmark, now predicts world oil demand will rise by 1.03 million bpd in 2008. It has more than halved its estimate from 2.2 million bpd in July 2007.
Its next Oil Market Report, which will include the latest supply and demand forecasts, is scheduled to be released on June 10.
Despite the surge in prices, Tanaka stopped short of calling on the Organization of the Petroleum Exporting Countries to raise output as present supply rates could relieve upward pressure on prices.
"If the OPEC countries continue at this kind of level, we project improvements in the fundamentals of the market and inventories may build," he said.
PEAK OIL?
The high price of oil, which hit a record of $135.09 a barrel last month, is prompting more interest in peak oil, the view that supply has reached or may soon hit a high point and then fall.
But Tanaka said that was not a problem yet.
"I am always asking my staff is there peak oil coming. Before 2030, we don't think we need to worry. We have abundant resources underground, so the issue is over ground."
The IEA has highlighted so-called above-ground hindrances such as lack of investment and limited access by foreign investors to some of the world's largest oil reserves.
It is reviewing the long-term outlook for oil supply in a major report, the World Energy Outlook (WEO), to be published in November, a move that could point to continued constraint on production.
The WEO's current reference scenario sees world output rising to 116 million bpd by 2030 from about 86 million bpd now. But some industry executives have questioned if that is possible.
Global production is set to stabilize just below 100 million bpd by 2020, executives at French oil company Total (TOTF.PA: Quote, Profile, Research) said on Monday.
Tanaka said the higher figure was unrealistic because of the impact on global warming of higher emissions from burning more oil, and a lower figure of around 100 million bpd was more likely.
"This 116 million bpd in our reference scenario last year, we called it unsustainable so we don't think it's going to materialize from the beginning," he said.
The agency regards the lower forecast for future supply as outlined in its alternative policy scenario -- a view of the future assuming governments take steps to curb oil use -- as being more realistic.
"So we are thinking that the governments should aim at the alternative policy scenario, and with this alternative policy scenario our assumption of oil production is 103 million bpd. That is a more reasonable level."
"We are going to analyze more carefully about the supply potential and investment situation and see more realistic assumptions," he added.
The IEA may cut its forecast for world oil demand growth further, said Nobuo Tanaka, executive director of the agency which advises 27 industrialized countries, during the Reuters Energy Summit.
He also conceded that a forecast of around 100 million barrels per day (bpd) for oil supply in 2030 was "more reasonable" than a higher IEA estimate which some industry officials doubt can be achieved.
"We are saying that we may see a further demand slowdown for the June report," Tanaka said. "How much, I don't know."
"We think yes the demand is slowing, especially in OECD countries."
A further cut to 2008 demand would follow evidence that record prices are slowing oil use in the industrialized world. Further pressure could come as other countries, such as Indonesia, raise domestic fuel prices.
The IEA, whose forecasts are an industry benchmark, now predicts world oil demand will rise by 1.03 million bpd in 2008. It has more than halved its estimate from 2.2 million bpd in July 2007.
Its next Oil Market Report, which will include the latest supply and demand forecasts, is scheduled to be released on June 10.
Despite the surge in prices, Tanaka stopped short of calling on the Organization of the Petroleum Exporting Countries to raise output as present supply rates could relieve upward pressure on prices.
"If the OPEC countries continue at this kind of level, we project improvements in the fundamentals of the market and inventories may build," he said.
PEAK OIL?
The high price of oil, which hit a record of $135.09 a barrel last month, is prompting more interest in peak oil, the view that supply has reached or may soon hit a high point and then fall.
But Tanaka said that was not a problem yet.
"I am always asking my staff is there peak oil coming. Before 2030, we don't think we need to worry. We have abundant resources underground, so the issue is over ground."
The IEA has highlighted so-called above-ground hindrances such as lack of investment and limited access by foreign investors to some of the world's largest oil reserves.
It is reviewing the long-term outlook for oil supply in a major report, the World Energy Outlook (WEO), to be published in November, a move that could point to continued constraint on production.
The WEO's current reference scenario sees world output rising to 116 million bpd by 2030 from about 86 million bpd now. But some industry executives have questioned if that is possible.
Global production is set to stabilize just below 100 million bpd by 2020, executives at French oil company Total (TOTF.PA: Quote, Profile, Research) said on Monday.
Tanaka said the higher figure was unrealistic because of the impact on global warming of higher emissions from burning more oil, and a lower figure of around 100 million bpd was more likely.
"This 116 million bpd in our reference scenario last year, we called it unsustainable so we don't think it's going to materialize from the beginning," he said.
The agency regards the lower forecast for future supply as outlined in its alternative policy scenario -- a view of the future assuming governments take steps to curb oil use -- as being more realistic.
"So we are thinking that the governments should aim at the alternative policy scenario, and with this alternative policy scenario our assumption of oil production is 103 million bpd. That is a more reasonable level."
"We are going to analyze more carefully about the supply potential and investment situation and see more realistic assumptions," he added.
