London (Platts)--31Aug2007

The International Energy Agency Friday said the ongoing subprime crisis
that has rocked stock markets could have some impact on US oil demand but not
before 2008.
     "We don't think these are the days of Jakarta and the Asian financial
crisis," the IEA's deputy executive director, William Ramsay, told Platts in
an interview. "There could be some impact on demand in the US but we are not
prepared to project any yet. We suspect if it does come, it will be in 2008."
     Ramsay criticized OPEC for setting a target price of around $70/barrel,
saying that it would hit the poorest hardest.
     "What is the basis for $70/b oil? How much does it cost to produce,
transport and process a barrel of oil? I am not suggesting that we are going
to get back to a cost-base price for oil, but $70/barrel is too high," Ramsay
said.
     "The people who are maintaining that this is not affecting our economic
activity are the press of the billion and half people who consume 80% of the
energy, it is not the press from the four and half billion who don't and are
being hurt by these prices," he said.
     He said stocks in the US were not as high as they needed to be and should
be built up ahead of the heating oil season.
     "When you have stocks below five-year averages, then you are way below
because stocks for the future should be a way above five year-averages or at
the top of five-year averages, because demand is growing," he said.
     The Paris-based IEA, which represents 26 industrialized countries, left
its global oil demand forecasts for 2007 and 2008 unchanged at 86 million b/d
and 88.2 million b/d, respectively. At the same time, in its latest monthly
report the agency urged OPEC to consider boosting crude production sooner
rather than later to ensure winter demand would be met.
     "Everybody's demand projections for the rest of the year show an increase
in demand. We don't have a unique stance on that, it is generally reflected in
forecasts so what we are saying is that we will need inventories to meet that
requirement. The stocks are not as strong as they need to be," Ramsay said.
--Jacinta Moran, jacinta_moran@platts.com