An upward revision in forecast crude oil demand in 1994 released on 5 May by the Paris-based International Energy Agency (IEA) has given a new lift to oil prices.
The IEA said world consumption would average 68 million barrels a day (b/d) in the year as a whole. This is 800,000 b/d higher than in 1993 and 200,000 b/d more than the IEA’s previous demand forecast, which was released in April. The forecast suggests the call on OPEC crude oil will average 25.1 million b/d in the year.
Crude oil prices rose by about $0.50 a barrel in response to forecasts of higher demand. Dated Brent blend was quoted at $16.12 a barrel on 11 May.
Rising demand for oil will lead to a huge need for finance. David Forbes, senior economist at the Arab Petroleum Investments Corporation of Al-Khobar, told a conference about Arab oil co-operation in Cairo on 9 May that Arab oil producers will need to invest $93,000 million in petroleum projects by the end of the decade. This was based on a forecast that demand for Arab oil would be 23.5 million b/d in 2000 compared with 19.4 million b/d in 1994. Actual capacity should be raised to 24.7 million b/d, Forbes said.
Forbes said that the call on banks will be almost $30,000 million. He also said that Arab producers would have to increase output to help meet rising demand in Asia, which will need an extra 46 million tonnes of gas a year by 2010.
A resolution passed by the conference called on Arab refineries to switch to producing larger quantities of light derivatives to meet the changing pattern of demand. Arab refineries should produce more lubricants, it added.