The Executive Director of the International Energy Agency said he did not expect oil prices to grow sharply because the demand is slowing down and there is a shrinking global raw market.
IEA’s Fatih Birol in public commentary made during a two-day conference in New Delhi said “Prices are determined by markets … If we see the market today, we see the demand slowing down considerably.”
The IEA is revising its forecast for rising oil demand in 2019 to 1.1 million barrels a day (bpd) and may cut back if the global economy and especially China show further weaknesses, Birol told Reuters in an interview Thursday.
Last year, the IEA predicted that the 2019 oil demand will increase by 1.5 million bpd. But in June this year it expected the growth forecast to 1.2 million bpd.
Birol said the “substantial oil sum is coming from the United States, about 1.8m barrels a day, plus oil from Iraq, Brazil and Libya”.
Under normal circumstances, he said, he does not expect a “big boost” in crude oil prices. But Birol warned that serious political tensions could still affect the market dynamics.
Crude oil prices rose nearly 2% on Friday after a US Navy ship destroyed an Iranian plane in the Strait of Hormuz, a major blow to gross global flows.
Referring to India, Birol stressed that the country could lower its imports, in the midst of rising oil demand in the country, boosting local oil and gas production.
Prime Minister Narendra Modi had set a target in 2015 to lower India’s dependence on oil imports by two-thirds of consumption by 2022 and half by 2030. But rising demand and low domestic output have pushed imports to 84% of the total needs in the last five years, shows government data.
Meanwhile, the IEA does not expect a global push for environmentally friendly electric vehicles to demand considerably crude demand, Birol said, as the world’s leading crude demand chief has been petrochemical, not a car.
He said the impact of a serious adoption of electric vehicles by the Indian government would not be felt immediately./Investing.com