World oil demand growth in 2005 will slow from a 28-year high this year in part because a squeeze on fuel supplies for Chinese power generation should ease, the International Energy Agency (IEA) said today.
In its monthly oil market report, the IEA shaved its estimate for 2005 demand growth by 70,000 barrels a day to 1.38 million bpd on the 83.7 million bpd world market.
That would put growth in 2005 at 1.7 per cent, down from 3.3 per cent or 2.63 million bpd this year when China led the steepest increase in world oil demand since 1976.
World growth in 2003 was 1.8 million bpd, 2.3 per cent, led by 11 per cent China growth. Chinese demand growth in 2005 is forecast at 360,000 bpd, 5.7 per cent, down from this year's 14.7 per cent or 810,000 bpd, when fuel consumption raced ahead of economic growth, said the IEA, adviser on energy to industrialised nations.
The report estimated Chinese third-quarter oil consumption slowed as expected to 8.6 per cent after gains of 19 per cent and 25 per cent in the first and second quarters of 2004.
"Barring any hard landing, we expect continued Chinese economic expansion to keep fuelling steep oil demand growth through 2005 and beyond," the IEA said.
"But we anticipate this to be partially offset in the short to medium term by reduced diesel demand growth for standalone generators as non-oil power generating capacity is gradually catching up with power demand.
The IEA said this year's record high oil prices appeared to have little impact so far on world oil demand. It said non-OECD growth continued to be supported by government subsidies on retail fuel prices.
But it said those subsidies had exerted significant pressures on government budgets which could cause delayed demand effects through reduced government expenditure.