Balancing the crude equation is now one of the key factors in the global markets today. Temperature and sensitivities on the issue of high prices are beginning to climb, all around. Brushing aside diplomatic channels, Gordon Brown the senior most finance minister of the world’s industrial superpowers is now strongly urging the oil producing nations to bring down the crude price levels. IMF is now projecting that higher oil prices could stunt the global economy. Alan Greenspan says the energy markets are under the greatest strain in a generation.

On the other hand endeavors are being made OPEC to ensure that the global markets remain balanced. The recent pronouncements by the Minister of Petroleum and Mineral Resources Ali Al-Naimi that the Kingdom could soon add another 200 billion barrels of oil to its already proven reserves of 263 billion, has to be seen in this perspective. Saudi Arabia is already the most dominant part on the supply side of the energy equation and if it manages to increase its reserve by another 200 billion barrels as is currently envisaged, the world could sigh a sense of relief indeed!

Energy analysts strongly felt that the announcement by the Saudi oil minister was another effort at assuring the oil markets there was no supply scare in the offing.

On account of a number of reasons, global energy requirement is galloping at an unprecedented rate. As per the World Energy Council (WEC), the task ahead is formidable. An estimated $16 trillion of new investments would be required all over the globe over the next 30-35 years, to meet an expected 55 percent rise in the global energy demand. WEC estimates that at the current enhanced rate of rise in consumption, global demand could double over the first 35 years of this century and then rise to another three time pre-millennium levels by the year 2055. A scary projection as some say and indeed with some justification!

The oil component of this explosion in energy consumption is also expected to increase by around 40 percent to over 110 million barrels per day by 2025. For comparison the OPEC is currently producing around 29 million barrels per day, thus the call on OPEC production will need to increase to over 45 million barrels a day by 2025, to meet this projected surge in demand.

The world consumes some 68 billion barrels of oil equivalent each year as primary energy — nearly 200 billion barrels per day. The hydrocarbon contribution to this supply today is almost 86 percent.

In the developing world this demand is to grow at more than double the rate of developed nations. Asia is expected to double its energy demand by 2025 and is likely to increasingly dominate the global economy. Indeed of particular interest is China where heavy industry and capital goods manufacturing sector are creating a huge demand for energy.

While economic growth in China and elsewhere in Asia continue to dominate the headlines, as one of the primary causes of the current bullish outlook in the oil markets, other specific factors are also worth noting. World population is projected to increase by one and a half billion people to 8.3 billion between 2000 and 2025, with Africa and Asia making up the biggest components over that period. Then industrialization of the developing world is another driver of continued surge in the energy demand. Increasing urbanization is also spurring increased energy consumption - 80 percent of the global population is likely to be urban by 2050.

This rise in consumption is a challenge to the world. Hence it was not without a sense of purpose when Al-Naimi said late last week, “these huge reserves enable the Kingdom to remain a major oil supplier for between 70 and 100 years, even if it raises its production capacity to 15 million barrels per day, which may well happen during the next 15 years.”

Indeed the target was evident. As a responsible player in the arena, the minister was trying to sooth down the scared, thirsty crude markets. And the markets did also not miss the point!

After approaching almost the $60 a barrel mark, global crude markets have considerably calmed down over the last few days. The calculated move has indeed paid off- at least to some extent!