ISTANBUL (Reuters) - Emerging markets such as China and India could make up for declining oil demand from developed countries and may be the cause for demand growth in 2009, the International Energy Agency’s chief economist said on Thursday.
The IEA cut its 2008 oil demand growth forecast by 250,000 barrels per day to 440,000 bpd earlier this month, but said 2009 growth would depend on whether countries like India and China go into a recession as deep or as fast as developed countries.
A global economic crisis has cut oil prices and the outlook for demand from countries in the Organisation for Economic Cooperation and Development has fallen, but Birol said he did not see demand falling from places like China or India.
“If those countries continue to consume oil as much as over the last couple of years they may easily make up losses coming from OECD countries,” the International Energy Agency’s Chief Economist Fatih Birol told Reuters in an interview on the sidelines of the World Eocomic Forum.
“If those countries don’t fall into a recession and I don’t think they will ... we may be able to see some growth in 2009 and therefore we may need to increase production in order to supply the market,” he said.
He also said current oil prices of around $65 per barrel were sufficient to continue investments in oil rich countries and in some more peripheral areas of production such as off-shore drilling or in Brazil.
U.S. crude was down nearly $3 at $64.86 a barrel by 1629 GMT. Oil prices have more than halved from a record $147 in July due to fears of lower demand as economic growth slows.
“Current oil prices for major resource holders such as those in the Middle East...are definitely at a good level for investments and for companies outside of the Middle East and where the marginal barrel comes from,” he said.
The swift fall in the price of oil has prompted fears that investments in the oil industry will slow, which could cause a shortage in supply once economic growth returns.
“If the investments (in the oil industry) are stalled or production doesn’t grow we may have serious problems in one and a half years,” said Birol.
He also said the IEA was releasing a report on November 17 regarding the outlook for world oil output including a field-by-field assessment of some 800 oil fields to project future decline in oil output.
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