Oil Likely To Fall If OPEC Output Stable: IEA, 09/30/08

Nobuo Tanaka, Executive Director of the IEA

According to Nobuo Tanaka, the Executive Director of the International Energy Agency, if OPEC production of crude oil remains stable at its current level, world oil prices are likely to decline in the short-term. However, Tanaka was not quite as optimistic for the medium-term. His concern lies in the lack of new oil production capacity coupled with emerging economies' demand for oil expected to rise. While demand for oil has decreased in the United States and Europe, demand is constantly rising in India and China. OPEC agreed to leave its crude output limits unchanged for now, but called for tighter production discipline which may result in a decrease in physical supply of up to 520,000 barrels per day. While a temporary respite from high oil prices is a welcome relief in the short-term, the lack of new production capacity possibilities make the outlook for the future more dismal. While growing economic markets increase the demand for oil, it is not clear where the supply will be available.

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