SINGAPORE (Reuters) - The IEA does not want OPEC to cut output at a meeting in December as demand for the producer group’s oil will be half a million barrels per day (bpd) more in 2012 than it pumped last month, a top IEA official said on Monday.
Gulf Arab oil producers raised oil supply this year to compensate for the loss of output from Libya, where civil war shut down production. Libya’s output is recovering, but the International Energy Agency saw no need for producers to cut back, the agency’s Deputy Executive Director Richard Jones said.
“Our projection for the call on OPEC for the whole of 2012 is about 500,000 barrels per day above what they were producing in September. So we don’t want them to cut back for sure,” Jones told Reuters on the sidelines of Singapore International Energy Week.
Libya’s output has risen since September, plugging some of the shortfall forecast by the IEA, which advises 28 industrialised countries on energy policy. Libyan exports would rise to around 350,000 bpd in November, sources at the National Oil Company (NOC) told Reuters in an interview on Sunday.
That was up from the 80,000 bpd the IEA said Libya produced in September.
Fuel costs have been high enough to drag on the global economy all year, Jones said.
Net oil imports for oil importing countries stood at around 5 percent of their GDP, Jones said. Global recession has typically followed such high oil costs in the past, he added.
“Whenever we see the so-called oil burden getting over 5 percent of GDP we’re pretty nervous,” he said. “That’s the level we’re at now. It’s happened 3-4 times in the last 30-40 years and we pretty much always get a recession. Emerging markets are particularly sensitive — India has a high oil burden.”
Jones declined to name a price that would prevent fuel costs dragging on economic growth.
Former IEA chief Nobuo Tanaka said earlier on Monday that a price of $70 to $80 was good for both producers and consumers, while a sustained Brent crude price above $100 was damaging to the global economy.
Brent crude has averaged over $111 this year, and traded over $109 a barrel on Monday.
Oil producers could tolerate a further fall in oil prices to $80-$100 a barrel, the oil minister for the United Arab Emirates said on Monday, the first indication of a preferred price range from a Gulf Arab producer since OPEC talks collapsed in June.
The IEA was not concerned about a slowdown in China as the country’s economy continues to grow quickly, Jones said. The health of industrialised economies were much more of a concern as China continues to grow quite quickly, he added.
Reporting by Simon Webb; Editing by Michael Urquhart