Japan quake may boost oil demand, IEA says

ASTANA. March 15. KAZINFORM The worst earthquake in Japan's history may boost oil demand once reconstruction work begins, and kept its forecast for global oil consumption in 2011 little changed, Bloomberg reported according to The International Energy Agency (IEA). Kazinform refers to Trend News.

Worldwide oil consumption will increase by 1.4 million barrels a day, or 1.6 percent, this year to average 89.4 million a day, the IEA said in its monthly Oil Market Report today.

According to the report, the growth is driven by developing economies in Asia.

The halt of nuclear plants in Japan following the disaster could bolster demand for other energy sources by the equivalent 200,000 barrels of oil a day, it said.

"Initially we may well see lower economic activity and oil demand in Japan, and then demand come back quite strongly if the nuclear plants remain offline," said David Fyfe, head of the International Energy Agency's oil industry and markets unit. "As reconstruction gets under way, there's potential for an uptick in demand."

Crude prices fell to a two-week low of $96.71 in New York today as 29 percent of refining capacity in Japan, the world's third-largest oil user, remained shut by the March 11 temblor.

"High oil prices entail significant downside risks to this year's outlook," the agency said. Spare production capacity in OPEC nations, while still a "calming influence" on prices, is at its lowest since 2008 at about 4 million barrels a day, according to the IEA. Kazinform cites Trend News. See www.en.trend.az