Brad Foss, AP Business Writer
WASHINGTON:
THE MIDDLE East, long recog-nised as a top oil producer, is taking on a new role as one of the world's fastest-growing regions for energy consumption.
The increased clip at which it burns petroleum -- twice its historical average and close to the growth rate of the Asia-Pacific region -- is contributing to tight oil supplies around the globe while demand continues to rise in the United States and China.
The growing thirst for fuel in countries such as Saudi Arabia, Qatar and Kuwait reflects strong economic growth induced by soaring global energy prices. Another factor is that U.S. military operations in Iraq and Afghanistan greatly depend on diesel and jet fuel purchased in the Persian Gulf.
DEMAND
This increased demand, which is only now starting to register with many experts, comes at a time when a debate is intensifying about whether a supply glut may develop in the next few years.
With the Organisation of Petroleum Exporting Countries (OPEC) pumping as much as it can -- and threatening to cut output if there is any significant drop in demand -- some analysts believe the cartel should be able to put a floor underneath prices wherever it sees fit for several years to come.
OPEC's President, Nigerian oil minister Edmund Daukoru, recently suggested that the cartel is comfortable with an average price of US$60 a barrel -- so long as the global economy continues to grow at those levels.
But a different camp contends that the cartel's ability to prop up prices could weaken in the coming years if projections prove correct that global production capacity will soon rise faster than demand. They point to projects scheduled to come on stream through the end of the decade in OPEC countries, such as Nigeria and Iran, and in non-OPEC countries like Russia and Brazil.
Cambridge Energy Research Associates, which is sponsoring a conference on the energy outlook this week in Houston, estimates that worldwide oil-production capacity will rise to 101.5 million barrels per day by 2010, leaving a healthy 7.5 million barrels per day emergency supply cushion in the event of an output disruption.
For now though, the world has a supply cushion of under 2 million barrels per day, or two per cent of total consumption. As a result, crude oil futures are likely to stay high because of geopolitical uncertainty and rising consumption linked to economic growth in North America, Asia and the Middle East.
