Agence France-Presse – 11 July, 2008
www.gulfinthemedia.com/index.php?id=415724&news_type=Economy&lang=en

OPEC yesterday cut its long-term estimate for world oil demand, saying
consumption by 2030 would be 3.7 percent lower than previously forecast as
soaring prices drive efforts to save energy. Oil prices hit record highs of
just below $ 147 last week and have more than doubled in the past year,
driving efforts to improve energy efficiency and seek alternative sources of
power.

In its annual World Oil Outlook, released yesterday, OPEC forecast that
world oil demand would amount to 113.3 million barrels per day (b/d) in
2030, rather than the 117.6m b/d predicted a year ago. The lower forecast
“reflects greater efficiency improvements due in part to the higher oil
price assumption,” OPEC said.

For the current year, the Organization of Petroleum Exporting Countries put
world oil demand at 86.9m b/d. Its members pump about 40 percent of world
crude. Since last year, oil prices have more than doubled, OPEC calculated,
with the cartel’s own reference basket price soaring from 71 dollars in
mid-2007 to more than $ 130 in June 2008.

Asked at a news conference what OPEC could do to stabilise or bring down
prices, secretary general Abdalla Salem El-Badri insisted that increasing
output, as repeatedly demanded by consumer countries, would not solve the
problem. “There is nothing wrong with supply and demand,” he said. “We don’t
see any shortage. There is no reason for prices to go up … There is plenty
of oil in the market and in the stocks. There is no need … even for the
price to be at $ 135 per barrel.”

El Badri saw other factors-the weakening dollar, geopolitical problems in
the Middle East, speculation and refinery bottlenecks – as the key. “These
are what’s causing the high oil prices,” he said, refusing to say whether
OPEC was considering an output hike at its next meeting in September to help
calm prices. “September is a long time away and we will decide at that
meeting,” he said.

El Badri also said OPEC would not be able to replace Iran’s oil production
if supplies were halted in case of a war with Israel or the United States.
“If something were to happen it is impossible to replace the production of
Iran,” he said. Iran is OPEC’s second-largest oil producer with an output of
about 4.0 million barrels per day. “We have no plans for wars,” El Badri
said. “We have plans for national disaster or something like that but for a
country to attack another country, we don’t have this kind of policy.”

According to OPEC’s annual World Oil Outlook, developing countries will
account for most of the anticipated rise in demand. Even so, “by 2030, they
will consume, on average, approximately five times less oil per person
compared with OECD (Organisation for Economic Cooperation and Development)
countries,” OPEC said, referring to the most industrialised, rich nations.

The cartel insisted that there was no danger of the world’s oilfields
running dry. “Availability is not an issue,” the report said. “There is
enough oil to meet the world’s needs for the foreseeable future … What is
an issue is the deliverability of the required oil.” Investment in
exploration and production in excess of 2.15 trillion euros ($ 3.4 trillion)
would be needed while 615bn euros would have to be invested in refineries,
OPEC estimated.

Oil prices shot higher on the back of simmering geopolitical tensions about
key producer Iran and lingering worries over stretched global crude
supplies, traders said. New York’s main oil contract, light sweet crude for
August delivery, was up $ 1.53 to $ 137.58 per barrel. Brent North Sea oil
for August added $ 1.09 dollars to $ 137.67.

 

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