ME economic slowdown will cut oil demand growth

ME economic slowdown will cut oil demand growth
Updated 21 January 2016

ME economic slowdown will cut oil demand growth

ME economic slowdown will cut oil demand growth

LONDON. The Middle East was the fastest growing region for oil consumption except China over the last decade as young populations and booming economies simulated a surge in fuel demand.
The Middle East is not only one of the world's most important producers and exporters of oil; in recent years it has become one of the most important and fast-growing consumers.
In an example of the destabilizing positive feedback loops in the oil market, the richer the countries around the Gulf became, the more their own internal energy consumption surged, and the more they contributed to oil demand.
Positive feedback from the Middle East's own oil consumption amplified the oil boom from 2004 to 2014; now it threatens to make the downturn worse.
Consumption of gasoline, distillates, fuel oil and other petroleum products across the region grew at a compound average rate of 3.9 percent per year between 2004 and 2014.
Middle East oil consumption grew almost four times faster than the world average, according to the BP Statistical Review of World Energy 2015.
In 2004, the Middle East consumed around 6 million barrels per day (bpd) of crude and petroleum products, which accounted for 7 percent of the world total.
By 2014, Middle East consumption had risen nearly 50 percent to 8.7 million bpd, around 9.5 percent of the world total.
Extra oil consumed in the Middle East (+2.8 million bpd) accounted for 30 percent of all the growth in worldwide oil demand (+9.0 million bpd) between 2004 and 2014.
The more oil prices increased, the more revenue poured into the countries of the region, the faster their economies expanded, and the more fuel they consumed.
Countries in the Middle East are among the world's highest per capita energy consumers, thanks to the harsh climate, rising incomes and subsidies which mean fuel and electricity prices are cheap.
The population of Saudi Arabia increased from 10 million in 1980 to 28 million in 2010, according to the United Nations Population Division. The population of the United Arab Emirates increased from 1 million in 1980 to more than 8 million in 2010.
Saudi Arabia's gross national income per capita increased more than tripled from $7,000 in 1990 to $25,000 in 2013.
And the economies of the Gulf Cooperation Council countries grew at a compound average rate of 5.8 percent per year between 2000 and 2012.

— John Kemp is a Reuters market analyst. The views expressed are his own.