The Executive Director, International Energy Agency (IEA), Fatih Birol, said on Tuesday that high oil prices are hurting consumers and could also have adverse implications for producers.
Major emerging Asian economies such as India and Indonesia have been hit hard this year by rising crude oil prices, which despite declining this month are still up by about 15 percent since the start of 2018.
Fuel import costs have been pushed up further by a slide in emerging market currencies against the dollar, denting growth and even triggering protests and government fuel price controls in India.
“Many countries’ current account deficits have been affected by high oil prices,” Birol said at an energy conference in Singapore.
“There are two downward pressures on global oil demand growth. One is high oil prices, and in many countries, they’re directly related to consumer prices. The second one is global economic growth momentum slowing down.”
The effect of high oil prices will be compounded in Southeast Asia as demand is rising fast but production is falling, resulting in the region becoming a net importer of oil, gas and coal, Birol said.
Despite the possibility of a slowdown, Birol said the general outlook for fuel consumption was for continued growth.
While the rise of electric vehicles is expected to result in peak demand for products like diesel and gasoline within coming years, a consumption boom in products such as plastic as well as fuel demand growth from aviation have triggered large-scale refinery investment into petrochemical products and high quality products like jet fuel.
“Global oil demand will continue to grow even amid the rise of electric vehicles as they are governed by petrochemicals, aviation, among others,” he said.