IEA: Global gas crisis spreading to oil Markets Demand for some oil products is unusually high

The International Energy Agency said gas shortages in Europe Asia had boosted demand for oil, adding to an already sizeable shortfall in the crude market.

Crude oil prices have risen above $80 a barrel, their highest level in three years, as traders expect record natural gas prices to spur consumption of other fuels, especially for power generation. The IEA said Thursday that traders' prediction was coming true, with oil use rising by an average of about 500,000 barrels a day over the next six months.

"As the global economic recovery gathers pace, severe shortages of natural gas, liquefied natural gas coal have triggered sharp increases in energy supply prices a massive shift towards oil products," the IEA said. "Provisional data for August already indicate unusually high demand for fuel oil, crude oil middle distillates power plants in some countries, including China."

Its newer analysis shows how severe gas shortages are spreading to other markets the economy as a whole. By exacerbating the current supply gap, the crisis could disrupt OPEC's cautious plans to gradually restore idle production. Energy-intensive industries have been badly hit by the crisis, which is likely to depress GDP growth boost inflation.

The IEA raised its forecast for demand growth by 300,000 barrels a day to 5.5 million barrels a day this year slightly raised its forecast for 2022 to 3.3 million barrels a day. The agency said the impact of gas demand oil conversion would be felt mainly in the current quarter next.

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Source: International Petroleum Network