By Tamara Walid
Global demand contraction seen easing in Q4; China, India to lead economic growth.
Global oil demand will grow 700,000 barrels per day (bpd) in 2010 as demand growth returns after two years of contraction, OPEC Secretary-General Abdullah al-Badri said in a speech delivered on his behalf on Tuesday.
China and India will lead global economic growth next year, with the producer group forecasting world GDP growth at 2.7 percent next year, up from an earlier forecast of 2.3 percent in July, he said in the text of the speech.
"There are signs that overall global demand contraction will ease in the fourth quarter," Badri said. "The consensus is that oil demand growth will return after two full years of contraction."
Oil demand growth will gradually rise to 1.2 million bpd by 2013, he said.
"Most of this demand growth will again be in non-OECD countries, with transportation, industrial and petrochemicals leading the way," Badri said.
OECD countries will contribute 0.5 percent of global economic growth, while emerging economies like China and India will lead the way with expected 2010 growth rates of 8.5 percent and 6.5 percent respectively, Badri said.
"All these indications are in line with OPEC's expectations. While we remain cautiously optimistic, there are signs that we are moving into positive territory in 2010," he said.
"But we recognise that there are still many challenges ahead."
Badri said OPEC was well positioned to meet any sudden supply disruptions and it continued to maintain spare capacity of about 6 million bpd.
"And while non-OPEC supply is growing, OPEC continues to invest in capacity in order to ensure that there will be ample supply to meet consumer needs in the future," he said.
The changing regulatory environment set in motion to help the countries across the world to respond to the financial crisis will require some adjustment, Badri said.
A U.S. Federal Trade Commission rule which took effect last week was expected to hit energy traders and companies with fines of up to $1 million a day if they manipulate the oil markets. The oil fine was just $11,000.
Uncertainty over the impact of pending environmental legislation was something OPEC was keeping a close eye on, Badri said.
"There is also pending environmental legislation in the world's advanced, oil-consuming countries which require that we all adjust to the realities of a carbon-constrained world," he said.
"The organisation recognises that industrialised countries have a historic responsibility to lead the way in its development, but OPEC also sees a need for more predictability in these emerging energy policies."
On Tuesday the International Energy Agency said the world would have to spend an extra $500 billion to cut carbon emissions for each year it delays implementing policy to tackle global warming. (Reuters)