Oil demand growth in the Middle East will slow but stay robust in 2009 as governments in the world's top exporting region boost spending.
The deteriorating world economy was expected to burn less oil for the second consecutive year in 2009. But while demand contracts elsewhere, the International Energy Agency (IEA) expects cheap fuel to lead to Middle East consumption rising by around 200,000 barrels per day (bpd) or nearly three per cent.
"Demand for transportation fuels in Saudi Arabia and Iran will continue to give support in the region because the fuel is still heavily subsidised in these countries," said Eduardo Lopez, senior analyst at the Paris-based IEA said.
Saudi and Iranian gasoline is among the world's cheapest and six years of economic growth fuelled by record oil export revenues has increased the number of vehicles on the roads.
Demand for power generation in Saudi, Iran and Kuwait and feedstocks for petrochemical plants were also expected to bolster consumption, Lopez added. The IEA pegs Middle East oil demand at around 7.2 million bpd in 2009, up from seven million bpd in 2008.
Middle East demand growth was likely to outstrip that of China, a much larger population and the main driver behind global demand growth. Chinese demand was expected to rise by 90,000 bpd in 2009.