Sharp oil demand rise forecast

15 July 1994

World oil consumption in the second half of 1994 will average about 68.2 million barrels a day (b/d), according to a forecast published in Global Oil Markets, the monthly hydrocarbon industry report published by the Washington-based Petroleum Finance Company.

This would represent a year-on-year rise of nearly 1.3 per cent. About 70 per cent of the increase is due to demand growth in OECD countries.

Global Oil Markets says that prospects for non-OECD oil demand in the second half of the year look better than in the first half, partly because of a slower rate of decline in oil use in the former Soviet Union. There are also better demand growth prospects in developing countries.

The report says that oil prices should stabilise below $20 a barrel for West Texas Intermediate (WTI) in July. The main source of potential market weakness is the possibility that the UN will approve the flushing of the Iraqi-Turkish pipeline, which contains 36 million barrels of crude (see Iraq).

At the start of July, traders said that disruption of Yemeni oil production due to the civil war had helped steady oil prices. Canadian Occidental announced that it was temporarily halting production from the Masila oil field because of fighting near the port of Mukalla. This is close to its oil export terminal Ash Shihr.

There was a suspension of output from the north Yemeni Marib field from 30 June-4 July because of a southern bombing raid. The field produces 190,000 b/d.

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