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International Energy Agency says global recovery could be threatened by rising oil prices
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Rising oil prices could imperil a modest increase in crude demand and the recovery of the global economy, the International Energy Agency said Thursday as it raised its outlook for oil demand this year.
"The recent price spike, if further extended, risks derailing the recovery," the IEA said. "Not only that, but oil demand itself would rebound much more slowly were the price rally sustained into 2010."
Oil prices reached a record high of $147 a barrel in July 2008, helping fuel the recession. Prices then bottomed out at around $32 in December but have remained mostly above $65 for months, going as high as $82 a few weeks ago.
The IEA estimated global oil demand would average 84.8 million barrels a day in 2009, 1.7 percent or 1.5 million barrels less than last year. In October, the agency's forecast for 2009 was of 84.4 million barrels a day.
China, Saudi Arabia and, to a lesser extent, the United States are seen leading the expected rise in oil demand at the end of this year and in 2010, the Paris-based agency said in its monthly report on the oil market.
The IEA described the increase of oil demand in the United States as "uncertain," because of constant data revisions and languishing diesel use — which is strongly correlated to economic activity.
"It would seem that the 'real' U.S. economy, as opposed to the financial one, is struggling to recover, despite the end of the recession," the IEA said in the report.
Global demand was also seen improving in 2010 to 86.2 million barrels a day, 500,000 barrels a day more than in last month's report.
The IEA said demand growth in China would stem from stimulus-related infrastructure spending while in Saudi Arabia it would be caused by the direct burning of crude for power generation — "rather than by more conventional industrial production, which is a better gauge of sustained economic activity."
Nonetheless, the agency expects global oil demand to show a positive annual growth rate in the fourth quarter of this year — the first time that will have happened since the second quarter of 2008.
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