Oil Supplies: Negative Oil Production Growth in the Middle East
By Sara Nunnally
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For the past three years, the Middle East has had negative oil supply growth, which has impacted total world supply.
World demand was revised up to 84.5 million barrels a day in 2006 and to an estimated 86.1 million barrels a day for 2007.
This year, Russian oil supplies are expected to grow by 483,000 barrels a day.
Oil Supplies: Negative Oil Production Growth in the Middle East
Today’s TFN Chart of the Day focuses on oil supply growth. I showed you a chart depicting a struggling Middle East. For the past three years, the Middle East has had negative oil supply growth, which has impacted total world supply.
World supply fell from an estimated 85.5 million barrels a day to 84.9 million barrels a day. At the same time, the International Energy Agency reported that world demand was revised up to 84.5 million barrels a day in 2006 and to an estimated 86.1 million barrels a day for 2007.
Demand in Korea is predicted to grow the most at 10.5% this year while demand in the U.K. and India is forecasted at about 4.3% growth. U.S. demand growth in 2007 is expected to be 1.9%.
So where will they be getting supplies?
Even though the Middle East is seeing shrinking oil supplies, it will remain a huge supplier, particularly to the U.S. But judging by supply growth estimates, Russia looks to be the “go-to” country for the future with three strong years of supply growth.
In 2005, supply grew 411,000 barrels per day. The next year, Russian oil supply grew by 460,000 barrels per day. This year, oil supplies are expected to grow by 483,000 barrels a day.
This new strength comes after two years of oil supply contraction in Russia, but the country is now updating many of its pipelines and developing new projects in Siberia for both oil and gas.
Perhaps that’s why Russia’s been trying to snap up high demand growth areas as customers. Gazprom is looking to acquire natural gas assets in Britain. Russia’s also partnering with Turkey to supply gas to Europe through Turkish pipelines.
The sun may be setting on the Middle East oil hub, and rising on the cold Siberian plains in Eastern Russia.
We’re not there yet, but look for Russia, i.e. Gazprom, to continue to make inroads to a needy market.
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S.R. Nunnally is a commodities expert and technical analyst for Taipan Financial News. She is the editor of Material Profits, a monthly newsletter providing in-depth, cutting-edge research in the commodities sector. She is also the founder of Material Profits Wildcatter, employing an elite group of aggressive investment strategies.
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