The U.S. Energy Department increased its crude-oil price projection for 2012 as Iran tensions climb, supplies are disrupted elsewhere and world demand grows.
West Texas Intermediate oil will average $105.71 a barrel this year, up 5.3 percent from the February projection of $100.40, the department’s Energy Information Administration said today in its monthly Short-Term Energy Outlook. The U.S. benchmark grade will average $105.75 in 2013, up $2 from the prior month’s estimate.
The average cost of domestic and imported grades used by U.S. refiners will be $114.58 a barrel in 2012, up 8.9 percent from last month’s projection of $105.23.
“We think there’s more than just Iran is behind the rise in prices,” said Eric Kreil, an EIA international oil market analyst in Washington who helped write the report. “This is a tight market. We’ve had a number of outages in non-OPEC countries and are looking for demand to rise.”
Futures have advanced 6 percent in New York this year amid tension over Iran’s nuclear program and speculation that the U.S. or Israel may attack Iran.
Outside of OPEC
Oil production outside of OPEC will rise 1.3 percent from 2011 to 52.46 million barrels a day in 2012, led by increases in the U.S., Canada, Brazil and Kazakhstan. The previous estimate was 52.54 million. Output declines are expected in Russia, Mexico and the North Sea.
Conflict in Sudan, South Sudan, Yemen and Syria has crippled production in the countries this year. Technical issues trimmed U.K. and Canadian output. Total production outside of the Organization of Petroleum Exporting Countries was down about 1 million barrels a day last month because of the issues, Kreil said.
The EIA lowered its forecast for global oil consumption this year to 88.96 million barrels a day from 89.25 million last month. Demand will be 1.2 percent higher than last year’s average of 87.9 million. The 2011 consumption total was revised up from 87.43 million in the February report.
U.S. oil consumption will average 18.77 million barrels a day in 2012, down from last month’s forecast of 18.87 million. Next year demand is projected to climb to 18.88 million.