‘Demand to go up but oil prices will remain steady’

RIYADH: Petroleum and Mineral Resources Minister Ali Al-Naimi said that although he expects demand for oil in 2011 to rise, he also believes prices will remain at last year’s rates.”The new global demand trend, which started 20 years ago, is expected to continue during the next 10 years, though at a higher pace,” Al-Naimi told delegates at the fifth Global Competitiveness Forum on Monday.The global oil demand is expected to continue to rise during this year by 1.5 to 1.8 billion barrels per day, an increase of two percent compared to last year, the minister said.”The demand is due to the increasing needs of the growing population in the globe,” he added.He said oil demand would reflect global economic conditions in general, varying from region to region. He predicted that oil demand is expected to continue to decline in countries with mature economies, good to excellent living conditions and dwindling populations, particularly in Western Europe and Japan, while the United States might experience a slight increase in demand as a result of its improving economy.

Al-Naimi noted that the increase in oil demand will come mainly from three major regions — Asia (particularly China and India), Middle East and Latin America.”This year might mark an important turning point in this direction, as oil demand in the emerging economies and developing countries is nearing its level in the OECD industrialized countries and will surpass it by 2013.”Twenty years ago, industrialized countries accounted for 70 percent of the global demand for oil.The minister said that the market this year will be in total equilibrium in terms of supply and demand with an appropriate commercial stock and a spare production capacity that can be used in any unexpected, political natural emergencies in producing or consuming regions.The global economy, he said, will grow by four percent this year, almost the same as the pre-crisis growth. Industrialized countries are expected to grow by 2.5 percent annually, while emerging economies such as China, India and Brazil grow at higher rates, some of them more than eight percent during this year.He hoped that large numbers of people from industrialized countries would continue to rise from poverty and experience better living conditions. Estimates indicate that more than 200 million people will join the middle class this year in Asia, the Middle East, Latin America and Africa.Such economic growth and expansion of cities would have a positive impact in terms of population, trade, industry, productivity, infrastructure and on the services sectors such as health centers and universities, he said.

“The number of cities with one million people and above in the emerging economies is currently estimated at 300 and this number is continuously rising.”Dwelling on the Kingdom’s petroleum policy, the minister said it is an established, solid and clear one that focuses on current and future needs. Its main objective is to maintain the oil market’s medium and long-term stability.”It is not only rich, endowed with natural resources, but also a model of excellence and competitiveness in technology and human talent.”The minister said the policy is implemented under the directions and direct supervision of Custodian of the Two Holy Mosques King Abdullah.The policy, he said, has eight main drivers, namely moderation, cooperation with the rest of the world, stability of the global oil market, serving the local market, focus on the administrative side, concentration on environmental aspects, focus on technology and looking at oil as part of the energy industry.

Describing the Kingdom’s petroleum policy as characterized by moderation and endeavor to promote peace, justice, international cooperation, regional and international stability and human prosperity, he said: “We also have strong ties with the companies and countries that import Saudi oil and we closely track the movement of global oil demand. In the 50s and 60s, Europe was our main market, then in the 90s our export focus shifted to the United States as a result of the growth in its oil demand. Now Asia is our main market, representing the destination of approximately 60 percent of our oil exports, a percentage that is expected to rise during the coming years – Arabnews