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.

 

War-torn Syria gears towards 'cessation of hostilities'

Italian PM warns Egypt friendship on the line

Yemen loyalist forces advance towards Sanaa

S.Sudan president names arch-rival his deputy

Berlin film fest competition kicks off with Arab film

Israel denies dropping controversial Brazil envoy pick

Tunisia prepares for possible intervention in Libya

UAE to deploy jets, commandos in anti-IS campaign

100,000 refugees in Syria border camps near Turkey

Greece given three-month ultimatum to remedy border ‘deficiencies’

Ankara hails world powers' Syria ceasefire plan

Five Yemen police killed in ‘Qaeda’ attack in Aden

Kuwait to finalise Eurofighter jet deal with Italy

Iraqi PM urges Kurdistan to drop any plans for independence

Russia accuses US planes of hitting Aleppo

Anti-ISIS coalition looks to decisive new phase

Turkey, Israel open new normalisation talks

Assault on Aleppo displaces tens of thousands

Moroccan King inaugurates Aquaculture Farm in Oued Ed-dahab

Turkish forces end operation in southern town

NATO launches unprecedented Aegean migrant naval mission

Erdogan threatens to send millions of refugees to EU

Suspected PKK militants attack two Turkey pro-govt newspapers

Train derails in Egypt’s Bani Sueif province

Iranians mark 37 years since Islamic revolution

Moscow ready to discuss modalities of ceasefire in Syria

Egypt hires UK firm to review Sharm security

Tunisia makes $500 million from assets of ousted president

Turkey dismisses pressure to open borders as 'hypocritical'

Efforts to form Libya unity government stumble over defence portfolio

Iran blames failure of Syria peace talks on participation of ‘terrorists’

Syria opposition hopes for end of sieges

UAE names women state ministers in major government shake-up

French Foreign Minister steps down with criticism of US role in Syria

Germany hopes Syria talks in Munich will agree to provide aid

Syrian Kurdish separatists open Moscow representation

Jordan rejects France extradition request for 1982 terror attack suspects

Libya parliament extends deadline for formation of new unity government

Herzog wants Israel to begin separation from Palestinian areas

Khomeini grandson loses appeal against exclusion from Iran elections

Turkey, US split deepens over support for Syria Kurds

EU tells members to accelerate refugee relocation

Abu Dhabi Crown Prince in India: String of trade, security deals expected

Syria regime's Aleppo offensive kills more than 500

Ex-Israeli PM’s prison sentence extended