The International Energy Agency doesn’t expect oil costs to rise significantly because demand is slowing and there is an excess in global crude markets, its executive director stated on Friday.
The IEA is revising its 2019 global oil demand progress prediction down to 1.1 million a per day (bpd) and may reduce it again if the world economy and especially China reveals additional weak point, Birol said in an interview on Thursday.
In 2018, the IEA predicted that 2019 oil demand would improve by 1.5 million bpd. However, in June this year, it reduced the growth prediction to 1.2 million bpd.
Under normal circumstances, he said, he doesn’t anticipate a “huge enhance” in crude oil costs. However, Birol predicted severe political pressures might yet impact market dynamics.
Crude oil costs rose nearly 2% on Friday after a U.S. Navy ship damaged an Iranian drone around Strait of Hormuz, a crucial chokepoint for global crude flows.
Referring to India, Birol pressed the nation might minimize its imports, amid growing oil demand in the nation, by increasing domestic oil and fuel production.
Prime Minister Narendra Modi had set a goal in 2015 to slice India’s reliance on oil imports to two-thirds of consumption by 2022, and half by 2030. However, strong demand and low domestic production have driven imports to 84% of total needs in the past five years, government information shows.
In the meantime, the IEA doesn’t expect a world push toward eco-friendly electric automobiles can depress crude demand significantly, Birol stated, as the primary driver of oil demand globally has been petrochemicals, not automobiles.
He said the impact of a critical electric car adoption push by the Indian authorities would not be felt instantly.