IEA raises outlook for oil demand, warns of Iran risks

PanARMENIAN.Net - The IEA raised slightly its outlook for growth of oil demand this year but warned on Friday, May 11 that risks of a shock from Iran persisted despite easing prices and a supply boost by OPEC, AFP reported.

In its monthly report, the International Energy Agency said that oil prices had dropped sharply in April amid poor economic data from the U.S. and Europe and an apparent easing of tensions between Iran and the West.

But despite easing tensions on the market, the IEA said "there is no room for complacency: the path of market fundamentals for the rest of the year remains highly uncertain and geopolitical risks will likely continue to keep prices high."

The world's four biggest markets should dominate the demand story in 2012, the IEA said, with declines seen in the Europe and the U.S., but demand picking up slightly in China and more firmly in Japan.

Oil consumption in Europe "is in a dire state, matching the region's general state of economic malaise", but declining trends in North America seemed to be abating, the IEA said.

The International Energy Agency said that demand for oil would increase in 2012 by 0.8 million barrels per day (mbd) to 90.0 mbd, with consumption in emerging countries "more than offsetting" declining demand in richer OECD countries.

On the supply front, the IEA said OPEC nations had begun to boost output in April in order to meet any potential supply shocks owing to tensions with Iran.

The agency said that global supply increased by 0.6 mbd to 91 mbd in April and raised its call on expected output from OPEC in the third quarter of 2012 by 0.2 mbd to 30.9 mbd and by 0.4 mbd to 30.7 mbd for the fourth quarter.

But Iran remained a bit of a mystery, the IEA said, where crude output was unchanged at 3.3 mbd in April, but an approaching July sanctions deadline from the European Union promised uncertainty in the coming months. IEA warned that tracking Iranian exports has become increasingly difficult following reports that the National Iranian Tanker Company had ordered its vessels to shut-off their communication beacons.