OAPEC Monthly Bulletin is published by General Secretariat ofOAPEC- Information and Library Department.(ISSN: 1018-595X )All rights reserved. No reproduction is permitted without prior writtenconsent from OAPEC.Annual Subscription : (11 issues).Arab CountriesIndividuals: 10 KD or its equivalent in US $Institutions: 15 KD or its equivalent in US $Other CountriesIndividuals : US $ 40Institutions : US $ 60Checks and drafts should be made payable to OAPEC .Subscription orders should be sent to :OAPECP.O.Box 20501 SafatKuwait 13066State of KuwaitTel : (+965) 24959000Fax : (+965) 24959755E-mail : oapec@oapecorg.orgWeb-site: www.oapecorg.orgVolume 37 Issue 12
Oil Markets on the Brink of a New DecadeAt the end of 2010, as the world enters a new decade in the 21st century, we can see that the developmentswitnessed by the oil and gas industry and the energy market in general in the last ten years wereclearly defined. Perhaps we can gain some lessons by reviewing the circumstances that the oil marketexperienced. The petroleum industry as a whole saw dramatic changes, particularly after oil prices,which had been in the doldrums for a while, surpassed most expert predictions and forecast scenarios,soaring from about $23-$51/barrel in the first half of the decade to over $50/b and subsequently to over$100/b in the second quarter of 2008. Then, in July 2008, they reached about $147/b, only to plummetto less than $40/b in December of the same year in the wake of the world financial crisis.However, the decisive economic and financial measures adopted by the major economic powers tocombat the effects of the world financial crisis enabled the world economy to hold out. Oil marketsstarted to recover as prices rose and stabilized within the $70-$80/b range from the third quarter of 2009until the end of the fourth quarter of 2010. But a combination of factors made prices rise to over $90/bin the last days of 2010. They included the extremely cold weather conditions this winter, the economicupswing in emerging economies, especially China and India, and the active role played by OPEC instabilizing the oil market by keeping output levels unchanged throughout 2009 and 2010.A comprehensive look at 2010 shows that there were plentiful supplies in the oil market because theyrose by 2 million b/d to 86.2 million b/d, which was sufficient to meet world demand. OPEC countries,seven of which are Arab states, accounted for about 39.5% of the total output. The world economywitnessed a limited recovery in 2010, with a growth rate of 4.3%, although it was sporadic. Asianeconomies, specifically China, remained the main engine for growth, as economic growth there reached10.5%. World oil demand in 2010 rose by 1.5 million b/d, or 1.8%, above its 2009 level to reach about86 million b/d. Coincidentally, demand in 2009 had fallen by the same amount, 1.5 million b/d, or1.8%,.from its level in 2008.Regarding commercial oil stocks and days of consumption, they remained higher than the averagerecorded in the previous five years. Despite an abundance of oil supplies in 2010 and high inventorylevels, prices remained fairly stable, ranging from $70 to $85 per barrel. OPEC’s basket of crudes rosemore than $16/b, or 27%, to give an annual average of $77/b. Several factors contributed to the rise inprices, including economics, geopolitics, climate, speculation, and other technical matters. However,the main factor was the fluctuation of currencies and bonds, escalating speculation in futures markets,and growing concerns about the European debt crisis.It is obvious to any observer of the oil market that it is governed by a myriad of factors, some related tomarket mechanisms such as supply and demand and others that influence market dynamics in one wayor another. These include concerns about geopolitical instability in several production areas and themovement, or even feverish actions of the speculative entities in oil markets and raw material marketsas a means of making a quick profit and a safe refuge for their capital deployment.On the other hand, the taxes imposed on oil products in major consuming countries remained high.Gasoline tax ranged between 16% in the USA and 65% in the UK in 2010.For OAPEC member countries 2010 brought some good news. Their crude oil production topped 22million b/d, compared with 19.8 million b/d in 2009, and their crude exports approached 17 million b/d,bringing their oil revenues to an estimated $450 billion.Undoubtedly the continued improvement in oil revenues will enhance the economic performance ofOAPEC member countries and help them achieve balanced growth in all production sectors. It willalso enable them to pursue their socioeconomic development programs and their investments in the oilindustry so as to boost their production capacity and their ability to meet growing demand for oil.As we stand on the brink of a new year and a new decade, the General Secretariat of the Organizationof Arab Petroleum Exporting Countries hopes they will bring more progress and development to theArab petroleum industry so it can serve our member countries. Our members have spared no effort toboost stability in the oil market, to realize better returns from their exports of oil and natural gas for usein sustainable development projects and programs, and to fulfil their commitments to oil consumingcountries by ensuring secure and stable oil supplies.EDITORIAL3Volume 37 Issue 1
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