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27 February 2024

No let-up seen in demand for oil in 2008

By Khalil Hanware



The world is divided over the repercussions of oil hovering close to the $100 mark – split between the producing nations and the consuming nations. The journey of oil from under $20 per barrel in 1999 to the current level has been to the annoyance of energy consumers. The largest importer of oil and consumer of energy in the world, the United States, led protests followed by the new engines of world growth, China and India.


China currently imports more than 30 per cent of its oil. PetroChina recently became the world’s largest company by market value and the first to cross the $1 trillion (Dh3.67trn) mark. The growing presence of China in Africa and the bilateral ties with the Middle East are the pointers to its long-term strategy.


The Falcom report said about 100 Indian companies have invested more than $2.5 billion (Dh9.18bn) in Sudan, led by the public oil company, ONGC Videsh, which recently built a 700km pipeline project in the country. On the other hand, alternative sources of energy and efforts to curtail consumption have found few takers. As a result, demand has soared to an all-time high.


“Increased demand from Asia, higher oil prices, reduced spare capacity in the Middle East, wavering inventory in the US, insufficient refining capacity at the global level and tense geopolitical dynamics of the oil producing region are not new. These signs were visible for at least a few years. What caught most analysts off-guard was the dominant world demand,” Snehdeep Fulzele said.


According to the International Energy Agency (IEA), demand in 2008 will increase by 2.1 million barrels per day. Oil demand is 85.9m barrels per day in 2007 and is anticipated to increase to 88m barrels in 2008.


Global crude refinery output was seen falling in October to a seasonal low of 73m barrels per day.


IEA has in its recent report revised the demand predicted for 2008 downwards to 87.69m barrels per day.


This is less by 300,000 barrels per day from its estimate last month.


The Falcom report said oil demand is expected to rise by two per cent every year up to 2012. Estimates of future projections vary. Some put the demand in 25 years at 140m barrels per day.


“Speculative money has entered the commodities. Sub-prime loan crisis has made not just crude oil but also gold an eye-catching destination. This artificial demand has boosted the prices as well,” Fulzele said.