OPEC foresees lower consumption, may cut output

09 March 2009

Oil cartel OPEC will slash its forecast for oil demand in 2009 by one million barrels per day in its monthly report due later this month, the group's secretary-general Abdullah Syed al-Badri told reporters in Doha on Monday.

All options were on the table when the group's ministers meet to discuss oil supply on 15 March, al-Badri said. The oil price was "not really acceptable" to OPEC, but was also not as bad as it could be given the state of the global economy. OPEC supply cuts since September last year had helped stabilise the price, he added.

 On Friday, al-Badri had said in a statement that low oil prices could provide economic stimulus in the short term, but at the cost of a supply shortfall in future due to low investment.

 The comments followed statements from the International Energy Agency, which advises the 28 most industrialised countries that the world would get a $1 trillion economic stimulus if oil prices stayed at around $40 a barrel through 2009.

"If the current low price environment persists, this short-term relief may not translate into long-term gain," al-Badri said. "Oil prices need to be at levels to help sustain economic growth by supporting longer-term energy industry investments across the board."

 Speaking to Reuters on Thursday, IEA executive director Nobuo Tanaka warned of a possible repeat of last year's record high oil prices by 2013 if producers did not invest in new supplies. OPEC members, who control more than three quarters of the world's proven oil reserves, have postponed some projects to expand supplies due to low prices and falling demand.