S&P forecasts oil-fuelled growth for Middle East

Reading Time: 1 minute

Countries in the GCC can expect five years of economic gain from rising oil prices, according to a report by Standard & Poor’s.

Compared with the global financial crisis in 2008-2009, the future looks much rosier for countries in the GCC that rely on oil exports. The reason cited by S&P is the geographic distribution of growth between developed and emerging markets over the next three to five years, which should see oil prices steadily rising.

Based on forecasts that global demand for oil rises at about half the rate of global GDP growth, S&P reported that oil demand is expected to rise at a rate of 1.75 per cent a year over the next decade.

However, according to the International Energy Agency, global oil supply increases by about 1 per cent a year, resulting in an S&P-projected annual deficit of 0.7 per cent. This means demand will top supply with the oil-exporting countries benefiting.

S&P warns that though conventional oil producers are in the driving seat for the immediate future, oil production from unconventional means, such as shale oil, may offer a long-term threat if the industry is able to cut down on the high production costs.

Shale oil production in the US has reached about 1 million bpd, which is 10 per cent of national output, but the cost of each barrel is about US52 compared with $17 for the conventional oil produced in the GCC.

Conventional producers, therefore, according to S&P, must continue to upgrade production levels to maintain that cost-overheads advantage if they are to maintain their stranglehold on global oil supply.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

Reading Time: 1 minute

Countries in the GCC can expect five years of economic gain from rising oil prices, according to a report by Standard & Poor’s.

Reading Time: 1 minute

Countries in the GCC can expect five years of economic gain from rising oil prices, according to a report by Standard & Poor’s.

Compared with the global financial crisis in 2008-2009, the future looks much rosier for countries in the GCC that rely on oil exports. The reason cited by S&P is the geographic distribution of growth between developed and emerging markets over the next three to five years, which should see oil prices steadily rising.

Based on forecasts that global demand for oil rises at about half the rate of global GDP growth, S&P reported that oil demand is expected to rise at a rate of 1.75 per cent a year over the next decade.

However, according to the International Energy Agency, global oil supply increases by about 1 per cent a year, resulting in an S&P-projected annual deficit of 0.7 per cent. This means demand will top supply with the oil-exporting countries benefiting.

S&P warns that though conventional oil producers are in the driving seat for the immediate future, oil production from unconventional means, such as shale oil, may offer a long-term threat if the industry is able to cut down on the high production costs.

Shale oil production in the US has reached about 1 million bpd, which is 10 per cent of national output, but the cost of each barrel is about US52 compared with $17 for the conventional oil produced in the GCC.

Conventional producers, therefore, according to S&P, must continue to upgrade production levels to maintain that cost-overheads advantage if they are to maintain their stranglehold on global oil supply.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid