Oil Price Surge to Constrain Demand Growth, Warns IEA

Rising crude prices will restrain oil demand growth, the International Energy Agency said, just as the body warned of a price spike due to a potential “double supply shortfall” from Iran and Venezuela. The Paris-based agency revised lower its assumption for 2018 oil consumption growth to 1.4m barrels a day — from a prior estimate of 1.5m b/d — with total demand expected at 99.2m b/d. “We expect a slowdown in [demand growth in the second half of the year] largely attributable to higher oil prices,” the IEA said in its monthly oil market report. “Crude oil prices have risen by nearly 75 [per cent] since June 2017. It would be extraordinary if such a large jump did not affect demand growth,” it said. Robust oil demand together with supply curbs led by Opec and Russia have coincided with a series of geopolitical crises over the past year pushing up prices towards $80 a barrel this week. The removal of energy subsidies in big consumer economies in recent years, such as those in India, could mean rising prices have a bigger impact on demand, the IEA said. The IEA said higher production from the US would need to compensate for lower volumes from elsewhere. Even as it expects robust US production in 2018, it said the industry is facing “logistics constraints” limiting its impact. – Financial Times