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Saudi: 2011 oil demand to grow 1.8M barrels a day

Saudi: 2011 oil demand to grow 1.8M barrels a day

January 24th, 2011 in News

RIYADH, Saudi Arabia (AP) - World oil demand could climb by about 2 percent this year, Saudi Arabia's oil minister predicted Monday, while voicing expectations that crude prices would remain stable.

Ali Naimi said the growth - between 1.5 million to 1.8 million barrels per day - would be based largely on demand from China and India. The two nations whose economies have been booming have been repeatedly cited as the drivers for otherwise tepid oil demand growth over the past couple of years.

The prediction about stability in the prices is significant in a world still working to emerge fully from the financial crisis a couple of years earlier.

The Paris-based International Energy Agency warned last week that oil at $100 per barrel for a sustained period in 2011 could stunt the global economic recovery. The U.S. benchmark crude futures contract was hovering slightly above $89 per barrel in electronic trading on the New York Mercantile Exchange on Monday. The U.S. benchmark had hit $93 per barrel, sparking worries that the price could rally further.

Naimi said that the increase in demand could prompt non-OPEC oil producing nations to increase production.

The 12-nation Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the de facto leader, held its output quotas unchanged during its last meeting in December. The group, which supplies over a third of the world's crude, has left its official production targets unchanged for two years.

Oil ministers from several of the OPEC member nations have increasingly indicated that $100 per barrel crude was a suitable level - comments that appeared to signal a desire by the price hawks to move away from the $75 to $80 per barrel range that Saudi Arabia and others has said it fair for both producers and consumers.

Many of those same nations, such as Iran, rely overwhelmingly on oil sales for their government revenues and higher prices are key to helping them meet budget constraints and other domestic economic woes.

Naimi said that Saudi Arabia's spare production capacity was at about four million barrels per day while OPEC's overall spare output capacity was at roughly six million barrels per day.