The IEA trimmed its forecast for oil demand growth because of gloomy economic prospects, but said on Friday that markets were taking in their stride tougher international sanctions on Iran. The International Energy Agency cut its forecast for growth in oil demand this year of 0.8 million barrels per day (mbd) from 1.1 mbd after the International Monetary Fund slashed its estimate for global economic growth in 2012 to 3.3 percent from 4.0 percent.
The IEA was largely sanguine about the impact of tighter international sanctions on Iran, including an EU import ban which takes effect in July. "Despite tougher new sanctions by the international community, the market is largely still taking the situation in its stride," said the IEA, which is the energy monitoring and policy forum of the OECD, in its monthly review.
It said "the market in 2012 likely has sufficient supply-side flexibility ... to adjust to any loss in Iranian volumes" given Opec space capacity and expected new sources. And while "perceptions of impending supply issues are clearly placing a floor under oil prices for now," said the IEA, it has been a severe cold snap in Europe that has driven Brent crude prices to six-month high levels in early February.
New York's main contract, West Texas Intermediate (WTI) light sweet crude for delivery in March, sank $1.09 to $98.75 a barrel. The new forecast of global oil demand of 89.9 mbd by the IEA, which represents industrialised consuming nations, is slightly higher that that of the Opec oil producers cartel, which trimmed its 2012 demand forecast on Thursday to 88.76 mbd. The IEA said global oil supply rose by 0.1 mbd in January to 90.2 mbd with gains in Opec countries offsetting a 0.2 mbd drop in non-Opec producers.
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