Global demand for oil will be higher than projected for both this year and next, according to the latest from the International Energy Agency (IEA).
The IEA’s monthly Oil Market Report for December now pegs oil demand around the world for 2013 at 91.2 million barrels per day (mb/d) — an increase of 130,000 barrels per day over last month’s. The latest report also increased projected demand for 2014 to 92.4 mb/d, which is up 240,000 barrels per day over November’s estimate.
Significantly, global oil supply in November reached 92.3 mb/d. It’s not clear if oil supply for this year as a whole will total at a similar level. And even if it did total that level in 2014, it would still be slightly outstripped by the IEA’s projected demand. That would mean tighter oil supplies and thus higher prices.
Demand actually fell slightly below supply in 2012 — at 89.3 mb/d versus 89.4 mb/d, respectively — but it’s outrun supply pretty regularly over last few years, despite production booms, as rising living standards in China and other areas of the developing world have driven up consumption.
As a result, there’s little reason to anticipate oil and gas prices falling significantly any time soon, if ever again.
According to the IEA, the rise in demand was driven largely by unexpectedly large growth in western countries like the United States, as the economy here continues to (often slowly) recover from the 2008 economic crash. Oil production, meanwhile, is being held back by disruptions in Libya, Nigeria, and Kuwait. Tensions with Iran, and concern over how the recent deal struck between the Middle Eastern country and the United States and Western governments will play out, are also contributing to uncertainty over crude oil supplies.