OIL - IEA sees supply crunch looming

London: World oil demand will rise faster than expected to 2012 while production lags, leading to a supply crunch, the International Energy Agency said yesterday.
In its Medium-Term Oil Market Report, the adviser to 26 industrialised countries said demand will rise by an average 2.2 per cent a year between 2007 and 2012, up from a previous medium-term forecast of 2 per cent.
The outlook, which updates an IEA forecast last issued in February, coincides with a jump in oil prices to more than $75 a barrel, closing in on a record high near $79, on concerns of a tightening market.
"Despite four years of high oil prices, this report sees increasing market tightness beyond 2010," the IEA said.
"It is possible that the supply crunch could be deferred - but not by much."
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The IEA's previous Medium-Term report called for world demand growth of two per cent a year between 2006 and 2011.
It now expects global demand to reach 95.8 million barrels per day (bpd) from 86.1 million bpd in 2007. The forecast assumes average global GDP growth of 4.5 per cent annually.