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IEA spells out effect of subsidies

A PHASE-OUT of fuel subsidies across the world between now and 2020 could cut global oil demand by as much as 2m barrels a day (b/d) by 2015 and by 5m-6m b/d in a decade's time, preliminary research by the International Energy Agency (IEA) suggests

"We don't necessarily think it's likely," David Fyfe, head of the IEA's oil industry and markets division, tells Petroleum Economist. "But that's the sort of scale of the issue." Some countries, including India, are attempting to remove or reduce subsidies, and sustained high oil prices may accelerate that process, he adds. However, social pressure means they are likely to be retained in many markets, inflating oil demand. The IEA says around 70% of new Middle East crude-production capacity over the next five or six years will be swallowed up by demand growth within that region, with a substantial part occurring because of low, subsidised prices. The degree to which governments retain fuel-

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