The world oil market risks being tighter later this year if OPEC is inflexible over production, the International Energy Agency warned today, sharply raising its estimate for world oil demand in 2007.
The IEA pointed to unexpectedly strong demand in big emerging economies, a sharp fall of world supply in May and another crimping of supply in June because of routine maintenance on infrastructure outside the OPEC zone.
It raised its forecast for the growth of daily demand from figures estimated a month ago by 420,000 barrels per day to 1.7 million barrels a day.
'It seems difficult to escape the conclusion that the oil market will be tight in the second half of the year,' the agency said in its monthly oil market report in which it increased its forecast for global oil demand by about 400,000 barrels a day, or 2%, to 86.1 million barrels.
The IEA has been at odds with the Organisation of Petroleum Exporting Countries (OPEC), an association of oil producing countries set up with the express purpose of influencing oil prices by controlling supplies, over the need to pump more crude.
Late in May Saudi Arabia's assistant oil minister said there was no need for additional crude supplies.
World oil prices were stable this afternoon despite the IEA prediction for global crude demand.
Brent North Sea crude for July delivery lost 13 cents to $69.43 per barrel in electronic trading.
New York's main oil futures contract, light sweet crude for delivery in July, added just three cents to $66.00 per barrel in electronic deals before the official open of the US market.
