25 October 2016, Singapore — Global oil demand will rise by 1.2 million barrels per day (b/d) in 2017, steady from 2016 global demand growth levels, despite gains in Chinese consumption, the chief of the International Energy Agency (IEA) said on Tuesday in Singapore.
Talking on the sidelines of Singapore’s International Energy Week, the IEA’s executive director Fatih Birol said that oil demand growth could weaken if prices kept rising.
International benchmark Brent crude oil futures have almost doubled from their January multi-year lows to over $50 per barrel.
Birol said the slowdown in demand growth, compared with the 1.8 million b/d seen in 2015, would likely mean that a re-balancing of oil markets in terms of supply and demand would not happen until the second half of 2017.
Birol also cast doubts on the effectiveness of a planned output cut by the Organization of the Petroleum Exporting Countries (OPEC) to prop up prices, as this could trigger new production elsewhere, further undermining a re-balancing of oil markets.
“If there is an increase in the prices as a result of this (OPEC-led) intervention, we may well see a response from higher cost production,” Birol said, adding that at $60 per barrel, U.S. shale oil and offshore projects in Latin America could resume.
Despite an overall slowdown in demand, China – the main pillar of demand growth in recent years – will further increase its imports because of declining domestic crude production caused by lower prices.
“China continues to be an important driver of global oil demand growth,” he said.
*Mark Tay, Henning Gloystein; Editing – Tom Hogue & Christian Schmollinger – Reuters