12 June 2013, News Wires – Oil demand in developing countries surpassed that of wealthy nations for the first time ever in April, a US report revealed on Tuesday, in the latest demonstration of how rapid growth in Asia has upended trade and increased competition for resources.
Led by surging growth in China, oil demand outside the wealthy nations’ club of the Organisation of Economic Co-operation and Development, OECD, has jumped by almost 50% in the last decade, hitting 44.5 million barrels per day in April, the US Energy Information Administration, EIA, said, according to a Reuters report.
Oil demand in developing countries “was higher than consumption in OECD countries for the first time in history”, the EIA said in its monthly Short Term Energy Outlook, which pegged demand at 44.3 million bpd for April in OECD countries.
While the data for April may be a seasonal blip, with oil demand in Western Europe and the US generally diminishing in the spring, 2014 should cement the developing world as the majority consumer of the world’s oil, the EIA said.
Ten years ago, the developing world consumed just two-thirds as much oil as wealthier countries, historical data from the EIA show. Countries in the OECD have also reduced consumption in response to higher prices and environmental concerns.
The changing patterns in global oil demand has pushed countries like China into new strategic and economic alliances.
“It has changed the way oil flows around the world,” Katherine Spector, head of commodity strategy at CIBC World Markets in New York, told Reuters.
“The developing world was already on a faster growth trajectory before the recession, but since 2008 we’ve also seen OECD oil demand fall sharply.”
Saudi Arabia, a long-term US ally, now ships roughly as much oil to China as it does to the US, sending over 1 million bpd in 2012. State-owned Chinese companies have also grabbed a bigger share of post-2003 Iraqi oil development and production than international oil firms.
West African producers like Angola and Nigeria, once big suppliers of North American refiners, are also shipping far more crude to Asia than before.
“We now see virtually no West African crude going to the United States,” Spector said.
From around 78 million bpd 10 years ago, global oil demand is now expected to average 89.2 million bpd in 2013, rising by almost 900,000 bpd from last year, the EIA said.
“Non-OECD Asia, particularly China, is the leading contributor to projected global consumption growth,” the EIA said.
The pace of China’s oil demand growth appears to be slowing, however, the EIA said, forecasting consumption would increase by between 420,000 and 430,000 bpd this year and next, compared with an average of 520,000 bpd between 2004 and 2012.
The EIA said that output in countries outside of Opec is seen rising faster than demand this year, growing by almost 1.2 million bpd to 53.91 million bpd.
“North America accounts for much of the projected growth in non-OPEC supply over the next two years because of continued production growth from US tight oil formations and Canadian oil sands,” the EIA said.
Industry experts now predict that North America could cut net imports of crude to virtually zero if the pace of production growth keeps rising and demand continues to slide.
“This supply boost will contribute to lower crude oil spot prices this year and next year,” EIA Administrator Adam Sieminski said, forecasting international benchmark Brent crude would average $102 a barrel in the second half of this year.
On Tuesday Brent crude oil fell by 99 cents to trade just below $103 a barrel, down from an average of $111 in 2012, Reuters said.