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World Oil Demand To Rise, says IEA

International Energy Agency (IEA’s) first forecast on the crude oil demand for next year suggests that global demand for crude is expected to rise by 1.6%, mainly  because of growth in the developing world, particularly Asia. While demand in industrialised countries is forecast to fall 0.3%, this will be counterbalanced by 3.6% growth in other economies.

On account of the increase in international crude oil prices, there was pressure on the OPEC to increase its crude oil output. This is because nearly 40% of the global crude oil is produced in these countries. A monthly report by the IEA states that the increase in oil  production has been well short of the anticipated call.

While Saudi Arabia increased its production by 3.5 lakh barrels per day, it was mostly done to meet the rise in domestic demand. The country needed more oil for power generation and water desalination plants during the peak summer season. The IEA estimates that only about half of the extra output of 3.5 lakh b/d  will have entered the international market. Kuwait and the United Arab Emirates boosted their output in June by a modest 50,000 b/d and 80,000 b/d respectively.

Indian Context

The IEA’s forecast also shows that India’s fuel demand may rise 3.8% in 2012 led by diesel and petrol (gasoline). This is in spite of the increase in retail prices of  both these products.

Diesel accounts for about 40% of the total fuel consumed in India. Its demand is expected to rise by 5.8% in 2011 to 1.37 million bpd and by 5.5% to 1.44 million bpd in 2012. Demand for petrol is rise 7.6% to 363,000 bpd in 2011 and 6.7% to 388,000 bpd in 2012. At the same time the petroleum ministry has released 4.6% demand growth expectation for the current financial year. However, it is not known if the recent price hike was taken in to account while calculating this figure.

For details on Petroleum Ministry’s Demand Estimates, click here demand_estimates

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