A worsening of the euro zone debt crisis would reduce Europe’s already slowing oil demand and could impact consumption in emerging economies, which are driving the increase in global fuel use, OPEC said on Monday.
In a monthly report, the Organization of the Petroleum Exporting Countries also said its oil output rose to a three-year high in December as Libyan supplies recovered and was far above the group’s new target of 30 million barrels per day (bpd).
OPEC said oil use in European members of the Organization for Economic Co-operation and Development (OECD) would fall by 160,000 bpd in 2012 and would drop further if the euro zone crisis deteriorates.
“If the situation were to worsen, the effect on the oil market could be seen not only through a further decline in oil demand in Europe but also with spillover effects on oil demand in the emerging economies, amid an adequately supplied market,” the report said.
Europe accounts for about 15 million bpd of the 88.90 million bpd OPEC expects the world will need this year. OPEC said the euro zone crisis had so far had little effect on oil demand outside the region.
OPEC, whose 12 members pump more than a third of the world’s oil, made only a minor downward revision to its forecast for global oil demand growth in 2012, trimming its estimate by 10,000 bpd to 1.06 million bpd.
The group is the second of the three closely watched oil forecasts from government agencies to be issued this month. Last week, the U.S. Energy Information Administration made a larger reduction of 120,000 bpd to its 2012 demand growth estimate.
The third of this month’s trio of reports is due on Wednesday from the International Energy Agency.
Brent oil was trading above $111 (U.S.) a barrel on Monday, supported by supply concerns. Iran warned Gulf Arab neighbours of consequences if they raised output to replace Iranian barrels facing international sanctions.
But top oil exporter Saudi Arabia said on Monday it can pump more oil at a moment’s notice.
At a meeting in December, OPEC settled a six-month-old argument between its Gulf Arab members and price hawks led by Iran over production policy by adopting a target to produce 30 million bpd.
In the second half of 2011, Saudi Arabia and its Gulf Arab OPEC allies had raised production unilaterally after failing to convince Iran, Venezuela and African members to agree to a coordinated increase to meet a shortfall in supplies from Libya.
OPEC’s report provided further evidence of Libya’s output recovery, following the virtual shutdown of its oil industry last year due to civil war, and little sign yet that the Gulf producers were curbing output drastically to make way.
According to secondary sources cited by the report, OPEC’s production rose in December to 30.82 million bpd, the highest since October 2008, largely in line with a Reuters survey published on Jan. 4.
While that is above forecast demand for OPEC crude in 2012 of 30.15 million bpd - a figure OPEC raised by 60,000 bpd due to slightly lower supply estimates from countries outside the group - it appears the market can absorb the extra oil, analysts said.
“The figures suggest over-production, but the market is holding on,” said Paul Tossetti of PFC Energy. “Among the factors holding prices up is concern over availability of Iranian supply.”