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Opec cuts 2012 oil demand forecast

London, March 10, 2012

The Organisation of Petroleum Exporting Countries (Opec) has trimmed its 2012 global oil demand growth forecast for the second time in two months because of worries about developed countries' economies and higher crude prices.

Opec now expects demand this year of 88.63 million barrels per day, down from its forecast a month ago of 88.76m bpd, it said in its March monthly report.

Europe's debt crisis and an oil price rally are the biggest threats to global oil demand this year, the Opec said on Friday while adding it was still pumping above its target despite a slide in Iranian production.

This still represents growth compared to 2011, when demand was 87.77m bpd, according to Opec figures that were revised slightly downwards.

'The weak pace of growth in the OECD economies is negatively affecting oil demand and imposing a high range of uncertainty on potential consumption growth,' the report said.

'Although US economic data points toward a better performance, the situation in Europe along with higher oil prices has resulted in considerable uncertainties on the future oil demand for the remainder of the year.'

Geopolitical factors, most notably tensions over Iran's nuclear programme and speculation of Israeli military action, sent Opec's reference basket oil price 5.1 per cent higher in February to $117.48 per barrel.

The monthly average was the highest since April last year.

Solid economic data in the US and easing worries over the euro zone debt crisis, coupled with speculative activities in oil futures markets, also served to push the price of crude higher, Opec said.

The group's 12 members account for about 30pc of global crude oil output.

Western powers have imposed a raft of economic sanctions on Tehran in a bid to halt its nuclear programme, which they suspect masks a drive to build weapons.

Tehran denies the charge, and has warned that it could close the Strait of Hormuz - a key transit route for global oil supplies - if increased Western sanctions halt Iranian oil exports. The Islamic republic is the world's fifth-biggest oil exporter and the second biggest producer in Opec.

On Tuesday EU foreign policy representative Catherine Ashton said on behalf Britain, China, France, Russia, the United States and Germany that they were ready to hold talks with Iran.

It remained to be agreed where and when the negotiations would be held. The previous talks broke down in Turkey in January 2011.-TradeArabia News Service




Tags: Iran | Opec | petroleum | Forecast | Oil demand |

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