Current oil prices above $70/b are already starting to drag on global oil demand and threaten to soften demand growth forecasts this year, the International Energy Agency’s executive director Fatih Birol said Friday.  The recent ramp-up in oil prices is weighing on demand, especially as it is occurring in countries such as China, US, and India, which are the world’s biggest oil consumers, Birol said.

“The higher oil price environment may, if they stay around this level, also have an impact…put some downward pressure under demand growth,” Birol told S&P Global Platts in an interview.  “So it will not be a surprise if we are to revise our demand numbers in the next edition of the oil market report if the prices remain at these levels.”

In its latest monthly oil market report released this week, the IEA kept its estimates for global oil demand growth in 2019 unchanged at 1.4 million b/d, up from 1.3 million b/d in 2018.  But oil prices have jumped by more than 40% since late December, with ICE front-month Brent trading at a five-month high of over $71/b, supported by OPEC/non-OPEC production cuts and supply outages in Venezuela and Iran. Rising oil prices could start to threaten oil demand in Asia, especially in a country like India, which is starting to feel the pinch more than others, Birol said.

India imports almost 80% of its crude requirements, and surging retail oil prices in the country are adding to inflation and increasing its fiscal woes. “It will definitely hurt oil demand if it soared especially in the important demand growth centers such as India,” Birol said. “This may well have implications for those demand growth centers around the world.”