IEA cuts 2015 oil demand growth forecast, predicts lower Russia supply

LONDON (ICIS)–The International Energy Agency (IEA) has cut its forecasts for global oil demand growth in 2015 by 230,000 bbl/day to 900,000 bbl/day on expectations of lower supply from Russia on the back of falling oil prices and economic sanctions, the France-headquartered body said on Friday.

Lower expectations for demand growth from Russia and other former-Soviet states for next year is balanced to an extent by predicted increased demand from the US, the agency added.

Oil futures benchmark prices have slumped by $15/bbl since the publication of the IEA’s previous market report in November, following cartel OPEC’s decision to leave production targets unchanged at a recent meeting, as Middle Eastern oil majors opt for lower pricing over reduced market share.

Oil-exporting economies are likely to suffer a stronger impact from the price falls than oil-importing countries will benefit, the agency added.

“The adverse impact of the oil price rout on oil-exporting economies looks likely to offset, if not exceed, the stimulus it could provide for oil importing countries against a backdrop of weak economic growth and low inflation,” the IEA said.

Global oil production fell by 340,000 bbl/day in November month as a result of lower OPEC supplies on the back of Libya’s faltering recovery, while refinery crude throughputs recovered from seasonal lows of 76.8m bbl/day in October.

Fourth-quarter throughput rates have been revised strongly up to 78m bbl/day, the IEA said.

“Refiners apparently took advantage of healthy margins ahead of a flurry of refinery start‐ups expected in early 2015,” the agency noted.

Despite the drop in overall demand growth forecast for 2015 on the back of Russia’s woes, lower oil prices are more likely to affect output in the medium- to long-term than in the short-term, due to the lead times of oil projects.

“Lower oil prices are already slashing producers’ spending…  projects that have already been funded will for the most part go on,” IEA said.


Source: IEA

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