PARIS — The global economic recovery will fuel ever greater demand for oil this year, with higher fuel prices expected to add a 15 percent burden on advanced economies, the IEA warned on Thursday. “Under current assumptions for global GDP, oil price and oil demand, the global oil burden could rise to 4.7 percent in 2011, getting close to levels that have coincided in the past with a marked economic slowdown,” the International Energy Agency said in its latest monthly Oil Market Report. “Indeed, the combination of higher prices with a fragile economic recovery, emerging inflationary pressures and instability in the Middle East is not a healthy one,” it added. The IEA, the energy policy and monitoring arm of the 34-member Organisation for Economic Cooperation and Development, estimated the global oil burden at 4.1 percent in 2010, knocking 0.8 percent of gross domestic product (GDP) in the OECD countries.
Based on oil at US$90 a barrel it estimated the oil burden would rise by 15 percent to 4.7 percent this year, near the 5.0 percent level it estimates is likely to trigger recession. The price for Brent crude has rocketed over US$100 a barrel for the first time since September 2008 as unrest in Egypt fuelled concerns of possible disruption to transit through the Suez Canal.
The IEA warned last month that sustained oil prices of US$100 a barrel pose a real risk to the world economy. Oil demand is still expected to grow in 2011 despite the pace of the global economic recovery tapering off, the IEA said. After taking into account the latest economic forecasts from the International Monetary Fund, the IEA said global oil product demand should reach 89.3 million barrels per day (mbd), an increase of 1.5 mbd year-on-year.
It estimated global oil demand rose by 2.8 mbd to 87.8 mbd in 2010. Chinese demand has continued to rise strongly. Oil demand gathering speed in December with a 17.7 percent increase against the same month in 2009 to 10.4 mbd, another record. Efforts by the Chinese government to cool off its breakneck economic growth make forecasting difficult, but the IEA said it expects Chinese oil demand to rise by 6.0 percent in 2011 to 9.96 mbd on average. The IEA raised its demand forecast for OECD countries by 90,000 barrels per day (bpd) to 46.0 mbd in 2011, which is a 0.2 percent decline from 2010 as advanced economies continue to wean themselves off of fossil fuels.