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 recaptures Amerli from Islamic State in biggest success so far

Iran says new sanctions cast doubt on US sincerity

Shebab target intelligence HQ in Somalia

Libyan Islamist militiamen control US embassy compound

Syria ‘guests’ suffer as prejudice grows in Turkey

Israel shoots down drone over occupied Golan Heights

Yemen army suffers heavy losses in new wave of Qaeda attacks

Turkish army breaks silence on Kurdish peace talks

Islamic State offers grim inspiration to African extremists

Israel expropriates 988 acres of Palestinian land in West Bank

Saudi King calls for ‘strong and rapid action’ against jihadists

Jihadists distribute Yazidi women as spoils of war to fighters

Gulf countries resolve six-month dispute with Qatar

Egypt reduces Badie death sentence to life in prison

AU forces liberate former Shebab stronghold in Somalia

Philippines enters war in Syria!

Kurds put aside old rivalries to battle jihadists in Iraq

US imposes new sanctions on Iran

US supplies arms to Lebanon to fight jihadists

Britain terror threat level raised to ‘severe’

Libya conflict takes its toll on migrants

UN chief lashes out at 'brutal' IS killings in Iraq

Over three million Syrian refugees have fled war

Libya's troubled interim government steps down

Obama admits 'no strategy yet' to fight IS

Israel counts losses and gains in Gaza: Heavy cost for 50 days of war

Saudi Crown Prince flies to France next week: Jihadist threat tops agenda

UN confirms capture of UN peacekeepers in Syria Golan

Islamic State executes dozens of Syria soldiers in new atrocity

'Jihad recruiters' arrested in Netherlands, Germany

Saudi Grand Mufti warns youth against ‘perverted’ calls for jihad

Neo-Ottomanism scores new victory in Turkey: From Ataturk to Erdogan

Fire rises up again from under ashes on Lebanon border

Vital aid arrives in war-battered Gaza

Lebanon seeks to tackle child marriage with new legislation

Hollande: Assad cannot be partner in fight against terrorists

Egypt quizzes Morsi for 'giving security papers to Qatar'

Top Saudi envoys hold talks with Qatar emir

Obama's warfare doctrine to be tested in Syria

UN moves to impose sanctions on Libya militias

Mother of US hostage to leader of Islamic State: Please spare my son

Turkey ruling party officially approves Davutoglu as new PM

US spy agencies face difficult task in Syria

Saudi Arabia jails 18 militants on terror charges

Gazans breathe sigh of relief