PARIS – This year for the first time, the emerging markets of China, India, Russia and the Middle East will consume more crude oil than the United States, the International Energy Agency said in a report today.
“The U.S. recession will be a footnote as far as the oil market is concerned,” Jeffrey Rubin, chief economist at CIBC World Markets Inc. in Toronto, told Bloomberg News. He noted that the oil supply “isn’t growing, and demand is growing robustly in the developing world.”
Rubin predicted oil will average $120 per barrel this year, up from not quite $98 in the first quarter, and will reach $150 “by the end of the decade.” The trend will benefit oil companies while boosting near-record food prices and hurting an airline industry that already has recorded four bankruptcies in a month, Bloomberg said.
Demand in emerging markets is expected to increase 4.4 percent this year to 20.67 million barrels per day, the IEA said. The agency cited economic growth of more than 8 percent in both China and India, plus their rising rates of auto ownership, which it expects to boost demand in those nations by 4.7 percent this year. (The shift was cited recently by the U.S. Department of Energy as one of the reasons for this year’s surge in U.S. prices for diesel fuel, which is used by more vehicles in emerging nations than here. READ MORE)
Meanwhile, U.S. demand is predicted to contract to 20.38 million barrels per day, a 2-percent decline from last year, in part because of higher fuel prices, the IEA said.
“Does the U.S. matter anymore? Has the U.S. mattered for the last few years? It is debatable,” Mike Wittner, head of oil research at Societe Generale SA in London, told Bloomberg today. “As far as the oil market is concerned, demand growth is going to be continued to be driven by China and the Middle East.”
The International Energy Agency is a 24-nation forum committed to advancing global energy security, policy and technology. For more information, visit www.IEA.org.
