Rising oil prices may hurt demand in some of the world’s fastest-growing nations unless producers take steps to boost supplies, according to the International Energy Agency.
“I wouldn’t be surprised if we revise our numbers,” Fatih Birol, the executive director of the Paris-based adviser, said in a phone interview, referring to the IEA’s forecast for demand growth this year of 1.4 million barrels a day. High energy prices are hurting consumers today, and could hurt the economies of exporting countries tomorrow, he said.
Brent crude, benchmark for half the world’s oil, has gained more than 20 percent since mid-August due to concern over supply losses from Venezuela and Iran. Saudi Arabia, the world’s largest exporter of crude, is comfortable with Brent above $80 a barrel as the global market adjusts to the loss of Iranian supply from U.S. sanctions, according to people familiar with the kingdom’s view.
Brent added 0.4 percent to trade at $84.88 a barrel as of 11:55 a.m. in Singapore on Friday, near the highest in almost four years.
“We are rather worried that the expensive energy is back, which may be hurting the global economy at a vulnerable time,” Birol said. “The oil exporting countries must, in my view, take these developments into consideration and it is high time for those countries to put more oil in the markets and comfort the markets.”
India is among emerging market economies struggling with a combination of a weakening currency and rising oil prices. The nation, which enjoyed a 12th straight month of demand growth in August, could see its trade deficit worsen because of the high crude, according to Birol. The nation moved to cut retail fuel prices on Thursday.
“With these prices, I would expect that the demand growth in India, other parts of Asia and in the Americas will be negatively affected,” Birol said, adding that there may be slowdown in demand growth.