The Organization of Petroleum Exporting Countries described the
global economy as "subdued" and "fragile," predicting no immediate
recovery in 2013. World oil demand is forecast to grow modestly as
the song remains the same for the foreseeable future. Short-term oil
markets, however, may see some volatility as the slowdown in China
factors into the markets. Adjustments to tightened pressure on Iran,
however, should encourage what OPEC described as a "comfortable"
situation for next year.
OPEC, in its monthly
report for July, said the prospects for significant recovery in
the global market is "fragile" in large part because of the ongoing
debt crisis in the eurozone coupled with stagnant employment
prospects in the United States. The economic growth rate for members
of the Organization for Economic Cooperation and Development is
predicted at 1.4 percent for 2013, the same level as this year. Any
major economic growth, said OPEC, will come from non-OECD members
India, with an economic growth rate of 6.6 percent in 2013, and
China, with a forecast of 8 percent. Nevertheless, world oil demand
for 2013 is predicted by OPEC to average 89.5 million bpd, a decline
of 100,000 bpd from the growth estimate for 2012.
The Chinese economy is slowing down. While the Chinese economy
represents about half of the global oil demand, its pace has
diminished. The International Energy Agency, it its monthly report,
said there was "cautious optimism" that Beijing could keep its
economy moving along, though historically, some oil benchmarks there
have shown steady contraction. In its
report, the U.S. Energy Information Administration said China
cut oil imports in June to their lowest rate since late 2011. With
its large economic representation in terms of global oil
consumption, the slowdown in the Chinese economy is expected to keep
oil prices tepid in the coming months.
While OPEC mentioned nothing specific of U.S. and European sanctions
targeting the Iranian energy sector, the cartel did say that Iran
was one of the players contributing to a general decline in OPEC oil
production in June. Crude oil prices hit historic highs early this
year when Iran threatened to choke off oil shipping lanes through
the Strait of Hormuz, casting a shadow over any hopes for short-term
global economic recovery. With the U.S. military sending more assets
to the region, Iran has once again
said there will be "bad consequences" should saber-rattling in
the gulf continue. Should Iran somehow shut down the key strait, 20
percent of the world's maritime oil shipments would be shut out of
the global marketplace.
That is until the weekend, when Abu Dhabi
inaugurated its $3.3 billion oil pipeline to the port of
Fujairiah. Middle East suppliers from Iraq to Saudi Arabia have
looked to alternative land routes to get their oil to markets.
Turkey, emerging as a key regional energy hub,
announced last week it started importing a few tankers full of
crude oil from Iraq and could eventually increase that to more than
100 shipments per day. Geopolitical tensions in the Middle East at
the beginning of the year added more than 10 percent to crude oil
prices. The UAE pipeline, however, should ease at least some of
those concerns when as much as 1.5 million bpd starts moving around
the Strait of Hormuz. While Iran will likely remain a factor in
global oil markets given its position among OPEC nations, it should
be more of the same long term. OPEC, for 2013, said economic and
geopolitical factors may lead to uncertainty in market forecast, but
there should be "a comfortable market situation next year."
Source:
Oilprice.com