World oil Demand Likely to Increase, Subroto Says

Oil prices have stabilized in world markets and demand is likely to increase in the second half of the year, Indonesia’s Mines and Energy Minister Subroto said.

He told a meeting of oil industry executives that oil prices had stabilized at 18 dlrs a barrel – the average fixed price OPEC put into effect in February – and supply and demand have been in equilibrium since March.

If OPEC does not increase overall output in the second half of the year, prices will tend to increase, because non-OPEC producers have not been able to produce more oil at current prices, he said.

But he declined to predict, when asked after the meeting, whether OPEC would raise its production ceiling of 15.8 mln barrels at its next meeting in June.

He said in his speech that world oil production over the last two months was estimated at 45.6 mln barrels a day, or two mln barrels a day less than world oil demand.

Oil production by industrialized countries, particularly the U.S. And Canada, is expected to decrease this year, but some of that slack will be taken up by increased production in Cameroon, India and other developing countries, he said.

This year is a battle between OPEC and non-OPEC oil producers and consumers in the industrialized world for the upper hand in world oil markets, Subroto said in an earlier speech to management trainees at Pertamina Oil Company.

“If OPEC emerges the winner, than it can gradually resume its former role in world oil markets,” he said.

“But don’t expect oil prices to return to the level of 28-30 dlrs a barrel, at least not in the next three or four years,” Subroto said.