The International Energy Agency reported Tuesday that the oil market will remain tight and supply may not keep up with demand through 2013, despite their weaker demand growth forecast. The agency cut its oil supplies forecast for the next five years, saying that supply will rise more slowly than expected, leaving little spare capacity. Heck, the fact of the matter is OPEC already has very little spare capacity left!
The agency went on to forecast an increase in global oil consumption of an average of about 1.6% a year through 2013, with the greatest potential for oil demand growth coming from developing countries, especially in Asia. These developing economies, which also include South America and the Middle East, will account for about 90% of increased global oil demand in the next five years.
None of this comes as a surprise to me. If anything, I think the IEA’s report is conservative. My work tells me supplies will be tighter than the IEA forecasts, and demand will be more explosive!
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