“With the Saudi King indicating the range of $75-$80 as satisfactory, we believe Saudi Arabia might be prepared to boost its output if oil prices move towards the levels beyond $100 per barrel mark seen in 2008,” Global said in its Oil Market-2010 Review.

“The recent statement by Minister of Petroleum and Mineral Resources Ali Al-Naimi, as reported in the media, regarding possible increase in OPEC production gives credence to our view,” Global added.

The Kingdom still commands the largest spare capacity giving it a significant leverage in future output boosts, the review points out.

World oil demand is expected to increase this year by 1.43 percent to 87.23 million bpd, Global said adding that bulk of the world demand growth was expected to come from China, North America and the Middle East region.

Increase in China’s oil demand is expected to contribute around 36.5 percent to the total oil demand growth in 2011.

The forecasted world oil demand figures are subject to the pace of recovery in the US, which is likely to play an important role in oil demand growth in 2011.

Global says the focus of OPEC has shifted from further output cuts to a boost in output as crude oil prices have witnessed a steady increase.

Oil prices recovered strongly 31.1 percent and 49.1 percent in 1Q-09 and 2Q-09 following the output cuts.

Crude oil prices have averaged more than US$70.0 per barrel mark in the four quarters of 2010 driving away the need for further output cuts.

The officials of OPEC member countries have indicated their satisfaction with current price levels.

In addition, the compliance with output cuts has not been total as member countries have increased their production steadily in view of the rising crude prices.

The member countries will be wary of the prices going too high as it might stall the economic recovery, the review points out.

In its oil market outlook for 2011, Global says the European debt crisis is likely to remain in focus this year as other economies in the euro zone face the prospect of requiring a bailout after Greece and Ireland were forced to seek help in 2010.

The crisis in the Euro-zone is likely to have an impact on oil prices as was witnessed in 2010 through weakening of the Euro against the US dollar.

In addition, austerity measures undertaken by the regional economies to bring fiscal deficits to manageable levels will continue to have an adverse impact on oil demand growth in the region in the short-term due to a slowdown in economic growth.

China is expected to be the main driver of oil demand growth with an expected increase of 0.45 million bpd in 2011.

Despite the expected decline in GDP growth rate, China is likely to remain the main driver of crude oil demand growth for the foreseeable future.

Recovery in the US economy will play a large role in determining the direction of oil prices.

“We expect average WTI crude oil price to be in the range of $85-90 in 2011, an increase of 7-13 percent driven by expected increase in oil demand by 1.4 percent,” said Global.

Meanwhile, it said non-OPEC supply is expected to increase at a slower pace in 2011 after steep increases over the previous two years which neutralized OPEC output cuts to a certain extent.

The decrease in non-OPEC supply will give OPEC member countries more leverage to influence oil prices.

“With many OPEC member country officials indicating their satisfaction with current oil price levels, we believe oil production levels may be varied to keep the oil prices at these acceptable levels,” Global said.