First Published: 2008-04-05

 
Power-hungry Mideast may cut summer oil flow
 

Leman Brothers: Supplies could tighten this summer if region faces another season of above-average temperatures.

 

Middle East Online

By Matthew Robinson - NEW YORK

.. and more buildings to come

Rising power use in the Middle East should draw oil supplies away from the international market again this summer and help drive up prices, a Lehman Brothers official said.

World markets could have lost 1 million barrels per day (bpd) of oil last summer, according to Edward Morse, Lehman's chief energy economist, as Middle East power plants were forced to burn crude and natural gas redirected from enhanced oil recovery projects as summer demand for services for air conditioning rose.

"The Middle East now appears to require more hydrocarbons being devoted to power generation than had been the case historically as power needs grow," Morse told reporters at the Lehman Brothers Commodity Round Table.

"If you look at Saudi Arabia, Abu Dhabi or the Emirates and Kuwait combined, I think a good number is world markets lost 1 million bpd for July and August, and the process probably started in May."

The lost Middle East exports and disruptions from Mexico, probably helped drive up oil prices last fall more than the flow of money from hedge funds, Morse said.

The fall in freight rates last summer was one sign exports from the oil-rich region were being curbed, he said.

New regional production and plans by Kuwait to import half a billion cubic feet per day of natural gas for six months should ease the strain by next year, Morse said.

Supplies could tighten again this summer if the region faces another season of above-average temperatures.

"There certainly should be enough crude oil, condensate and natural gas in combination to eventually catch up, and I think it is probably going to catch up in the summer of 2009," he said.

"I don't see it easing this summer."

Lehman increased its price forecast for the second, third, and fourth quarters for Brent crude, in part to reflect the Middle East constraints, after prices average $96.31 in the first quarter.

The bank now expects Brent to average $85 a barrel in the second quarter from previous forecasts of $85 a barrel, $105 in the third quarter against earlier calls for $90, and $80 in the fourth quarter from $75 previously.

 

Iraq operation to liberate Anbar faces barrage of criticism

Yemen shelling kills two Saudi border guards

Nusra Front chief pledges no attacks on West

Kerry set to launch final diplomatic push for Iran nuclear talks

Arrest of several FIFA leaders as part of twin corruption inquiry

Blair resignation widely welcomed by Palestinians

Qatar pledges $50 mn to Indonesia for sheltering Rohingya migrants

Al-Jazeera interview with Nusra leader draws criticism

Palestinians 'open' to every scenario on FIFA vote on Israel

Iran defends spy trial of US journalist

Iraq exhumed remains of 470 bodies from Tikrit mass graves

Coalition raids target headquarters of rebel troops in Yemen capital

EU calls for resumption of Palestinian-Israeli peace talks

Fast pace of executions in Saudi Arabia 'very disturbing'

Tunisia begins hearings into ex-regime's rights abuses

‘Islamic State’ executes 20 men in ruins of Syria ancient city

Saudi Arabia announces sanctions against two Hezbollah leaders

Libya to fight aggression with 'strength'

Iran says nuclear talks could go beyond deadline

Hamas accused of committing war crimes against civilians

German court rejects Yemenis' case over US drone killings

Kuwait emir urges Muslim states to fight extremism

NY Times journalist has Turkish citizenship revoked

Military site inspections necessary to Iran deal

Iraqi forces on outskirts of Ramadi

Syrian refugees ignored at Turkey poll campaign

Director 'shocked' at Morocco’s prostitution film ban

Libya PM survives assassination attempt

US criticises Shiite name of Iraqi military operation

Israel warplanes strike Gaza after rocket attack

Pro-government fighters retake Yemen city from Shiite rebels

Libya militias trap civilians in Benghazi

EU border agency plans to expand migrant rescue operation

Syria state TV blames ‘foreign enemies’ for signal jamming

Palestinians and jihadists clash in Yarmouk

Iraq refugees forced back into conflict zones

Kuwait restores Islamist lawmaker's citizenship

Washington Post reporter goes on trial behind closed doors in Iran

Iraq launches operation to drive ‘Islamic State’ from Anbar

New airport in restive eastern Turkey

Iran ‘thwarts’ US cyber attack on Oil Ministry’

Egypt opens border crossing with Gaza for 48 hours

Litany of problems keep Iraqi army weak and ineffective

Rouhani: most Iranians favour peace

Iran Foreign Minister discusses Yemen conflict in neutral Oman