Oct 11 Record global debt levels pose a clear
risk to oil demand, the International Energy Agency said on
Tuesday, citing figures from the International Monetary Fund
last week that showed the world is awash with a record $152
trillion in debt.
The IEA on Tuesday forecast global oil demand will grow at a
rate of 1.2 million barrels per day in 2017, largely unchanged
from 2016 and down from 2015's five-year high of 1.79 million
Years of low interest rates and have encouraged sovereigns,
corporates and individuals alike to load up on debt, which the
IMF estimates is equivalent to 225 percent of total global
Financial markets have generally shown that investors
anticipate a long period of low inflation and low interest
rates. However, the 45 percent rise in the price of oil this
year means energy is no longer the "overwhelmingly deflationary"
influence it was as recently as a year ago, the IEA said.
"If one believes futures prices, oil could continue to act
as an inflationary pressure. Assuming the majority of other
global price pressures remain deflationary, the current low
inflation/low interest rate environment will most likely
remain," the IEA said in a monthly oil market report.
"If other costs start to reflect the potential oil-price
upside, or at least lack of downside, then the status quo could
rapidly change making incumbent debt levels a hugely restrictive
expense," the agency said.
In its Fiscal Monitor published on Oct. 5, the IMF said
while debt profiles can vary from one country to another, the
sheer size of the debt could set the stage for an unprecedented
private deleveraging that could thwart a fragile economic
"Hence, achieving the IMF's central 3.4 percent 2017 global
economic growth forecast -- that underpins the demand forecasts
carried in this report -- will not be clear sailing," the IEA
(Reporting by Amanda Cooper; Editing by Louise Heavens)