JEDDAH: More than three-quarters of the world’s oil reserves are located in OPEC countries. The bulk of OPEC oil reserves is located in the Middle East, with Saudi Arabia, Iran and Iraq contributing 55 percent to the OPEC total. According to current estimates, OPEC proven reserves currently stand well above 900 billion barrels.
OPEC countries have made significant contributions to their reserves in recent years by adopting best practices in the industry. As a result of these additions, OPEC added 111 billion barrels of reserves, substantially more than the reserve additions made by other crude oil producers.
According to the information available on the website of the Organization of the Petroleum Exporting Countries, the global reserve/resource base can easily meet forecast demand growth for decades to come. Estimates of ultimately recoverable reserves (URR) have increased over time, with advancing technology, enhanced recovery and new reservoir development. According to an established industry source, reserve growth from improved recovery alone in existing fields amounted to 175 billion barrels in 1995-2003; combined with new discoveries of 138 billion barrels, total reserve growth was therefore well above the cumulative production of 236 billion barrels for that period.
The Monthly Report for August of OPEC said world oil demand is forecast to grow by 0.9 million barrels per day in 2009, averaging 87.80 million bpd, unchanged from last month’s forecast.
Non-OECD oil demand growth of 1.2 million bpd will account for all of the world oil demand growth next year.
US oil demand has been badly hurt by the slowing economy and high oil prices. Transport and industrial fuels declined the most, pushing the country’s total oil demand down by 3.8 percent. US oil demand fell 3.5 percent losing 0.7 million bpd in July.
Strong summer oil demand growth in China, the Middle East and Asia, which added around 1.2 million bpd, was not enough to offset the huge decline in OECD oil demand in the second quarter. Thus world oil demand is forecast to grow by 1.0 million bpd for 2008 to average 86.9 million bpd.
The OPEC report said Middle East oil demand growth reached 0.33 million bpd in the second quarter averaging 6.8 million bpd. Given the healthy economic performance in the Middle East, oil demand growth should remain strong in both the third and fourth quarters at 0.28 million bpd each. Transport and industrial fuel demand are on the rise and are expected to remain so for the rest of the year. Middle East oil demand growth is forecast to top 0.29 million bpd in the third quarter of 2008. Brazil, Venezuela, and Argentina are the main contributors to Latin America’s strong oil demand this year. Their economic boom led to strong oil demand growth this year; hence Latin America’s oil demand growth is forecast to grow by 0.19 million bpd to average 5.7 million bpd in 2008.
As a result of strong oil demand in other Asia, Latin America, the Middle East, and Africa, developing countries oil demand growth in 2008 is forecast to reach 0.8 million bpd to average 25 million bpd. Several variables pushed China’s apparent oil demand up 6 percent in the first six months of 2008. High economic activities along with the preparation for both summer demand and the Olympic Games were the reason for higher oil demand in 2008. Transport fuel demand grew the most in the first half of the year exceeding 15 percent.
However, July fuel oil imports declined by 35 percent due to low refining demand. To offset May’s high oil imports, China’s June oil imports grew slightly by only 2.2 percent resulting in apparent oil demand growth of only 3.1 percent in June. China’s apparent oil demand grew by 5.8 percent in the first six months averaging 8.06 million bpd.
Furthermore, China’s oil import in first half of the year grew by 10.7 percent averaging 4.2 million bpd. Despite market fundamentals indicating little need for additional crude, OPEC members have increased production to help calm markets. In July, OPEC output reached 32.64 million bpd, the OPEC report said.
The crude oil market kicked off the month on a strong note amid a weakening US dollar while geopolitical tensions continued to escalate.
The OPEC Reference Basket averaged more than 5 percent higher in the first week when it rallied $6.71 a barrel to settle at $138.31 a barrel to mark a record weekly high of $140.73 a barrel.
The price of OPEC basket of thirteen crudes stood at $108.68 a barrel on Monday, compared with $107.88 the previous Friday, according to OPEC Secretariat calculations.
