June 11 (UPI) -- The relatively high price for crude oil is having only a relatively minor impact on demand, though global economic growth could slow, a Platts analyst said.
The Organization for Economic Cooperation and Development said global economic expansion should be around 4 percent for the year, on par with the long-term average. Speaking in late May, OECD Secretary General Angel Gurria said growth is supported by economic policies that could be masking some risks from geopolitical issues and rising oil prices.
At around $76 per barrel for Brent crude oil, the global benchmark, the price is more than 60 percent higher than it was at this time last year. Chris Midgley, the head of Platts Analytics, said there are signs that demand could soften slightly, but demand was responding to strong economic growth expectations.
"In the short term, price should have a relative small impact on demand," he said in a statement. "But if commodity prices remain elevated, we could start to see this have a drag on global gross domestic product growth -- with signs of concerns in places like Turkey and Brazil for instance -- which could have a far greater impact on overall demand growth."
Crude oil prices have been supported by a policy from the Organization of Petroleum Exporting Countries to erase a surplus in oil inventories held by the world's leading industrialized economies with coordinated production cuts.
OPEC, along with support from Russia, hinted it may put more oil on the market in the second half of the year to offset chronic supply issues from Venezuela and the potential for declines from Iran, one of the largest producers in OPEC.
The impact of OPEC's effort, meanwhile, has been offset somewhat by rising U.S. crude oil production, which has responded to improvements for the price of oil. The U.S. Energy Information Administration estimates total crude oil production in April averaged 10.5 million barrels per day, up from the 9.4 million bpd average last year. Total U.S. output could top 12 million bpd next year.
The report from Platts, however, said the impact of U.S. oil production may be overblown because of the appetite for lighter type of oil found in the United States versus the heavier OPEC blends.
"It is not a like-for-like substitute and complicates the rebalancing picture," the report read.