OPEC sees a possible drop in energy demand caused by a weaker world economy as its “main area of concern” for the next several months, the group’s secretary-general said.
“As we approach the end of 2013 and into next year, we need to remain vigilant,” Abdalla El-Badri said at a conference today in Muscat, Oman. “The economy remains the major worry, particularly in the short and medium term.”
While the Organization of Petroleum Exporting Countries expects global economic growth to accelerate to 3.5 percent in 2014 from 2.9 percent this year, Europe faces a “major challenge” in its labor market, and growth in China and India has slowed, he said. A possible easing of U.S. monetary stimulus threatens investment in developing countries, El-Badri said.
OPEC, supplier of about 40 percent of world oil, plans to meet on Dec. 4 to review output levels and policy. The International Energy Agency, an adviser to rich energy-importing nations, trimmed its forecast earlier this month for growth in global demand in 2014 to 1.1 million barrels a day, or 1.2 percent. That’s about 100,000 barrels a day less than the IEA predicted in September.
Brent crude futures in London have averaged $108.60 a barrel this year amid supply disruptions in Libya, Syria and the North Sea and a European Union embargo on purchases of Iranian crude. The halts and interruptions have had “limited impact,” and prices in the range of $100 to $110 are “acceptable to producers and consumers alike,” El-Badri said.
North Sea Brent, a benchmark for more than half of the world’s crude, was at $109.94 a barrel at 2:30 p.m. today in London on the ICE Futures Europe exchange.
The IEA said this month that non-OPEC oil producers led by the U.S., Canada and Kazakhstan will augment supplies next year by the most since the 1970s.
“There has been and there remains more than enough supply to meet demand,” El-Badri said. “This is the case for the rest of 2013 and 2014.”
OPEC’s spare production capacity will stay at “comfortable levels” for the “foreseeable future,” he said.
The group’s 12 members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.