The Organization of the Petroleum Exporting Countries (OPEC) stated Wednesday that worldwide oil demand would taper off in 2013.
Oil production levels from non-OPEC nations would be adequate to handle the mild increase without requiring OPEC to increase production. OPEC produces about a third of the world’s oil.
As expected, the reasons for this projected slowdown in oil demand are the European debt crisis, tottering U.S. economic recovery, and the general worldwide economic malaise.
“Besides the euro zone crisis, geopolitical tensions in the Middle East, the contraction of manufacturing in the U.S. for the first time since 2010 and decelerating economic growth in emerging markets have been fuelling uncertainties regarding global economic growth,” OPEC said in a monthly report.
Incidentally, OPEC’s predictions run parallel with those made by the U.S. government on Tuesday. The government said in a statement that the demand growth estimate for 2013 would be limited to 730,000 bpd, a reduction of 360,000 bpd.
While OPEC left untouched their estimates for 2012 at 0.9 million bpd, they revised the 2013 estimate to 0.82 million bpd.
According to the OPEC, non-member nations’ supply will rise by 0.7 million bpd and 0.9 million bpd in 2012 and 2013, respectively.
The U.S. will experience the highest increase in oil supply in this group, with 0.37 million bpd.
Oil prices were hovering at record highs back in 2011 and were looking to break those records in 2012, but the global economic downturn caused prices to drop sharply to below $100 per barrel. If things go well economically, OPEC sees oil demand growing by 1 million bpd.
But if the sluggish economic recovery persists, an extremely slow growth will mean only 0.65 million bpd, and oil prices will continue to fall.