The global oil industry witnessed many important developments in 2009. In the short term, there has been an ongoing trend for price correction, following the rapid fall in prices to the low level of 30 dollars earlier this year. They then rose to the reasonable and acceptable price range of 70-80 dollars, in spite of the ongoing global financial crisis. What mainly drove this price correction was OPEC's decision to cut production around the beginnings of the crisis (autumn 2008), and not opting to wait a long period before deciding on this cut, as has happened for instance in the price drops of the eighties and nineties, and the ensuing disputes among OPEC's member countries. These disputes led at the time to a further collapse in prices, down to extremely low levels. In fact, the oil prices at the time collapsed down to 10 dollars, perhaps owing to OPEC's loss of credibility in the global markets. Also notable in 2009 was the decision taken by most oil-producing countries, especially those in the Arab Gulf, to capitalize on lower building costs to invest in giant projects in oil field exploration and development on one hand, and in building refineries and petrochemical plants on the other hand. This took place following many delays and postponements that occurred because of the massive hikes in costs. It is thus expected that these projects will compensate for the oil being extracted, while addressing future increases in oil demand. Moreover, Iraq has decided to cooperate with international oil companies to develop its oil fields in a fast and broad manner, whereby its productive capacity would increase from about 2.5 million barrels per day at present, to more than 10 million barrels per day, over the next decade. This decision and the agreements that were signed with the international oil groups are considered to be among the most important developments that will leave their mark on the oil industry in the upcoming few years. This is despite the doubts regarding the achievability of increasing Iraq's production capacity to the desired level on schedule, as well as in what regards the difficulties that Iraq will face in marketing its new quantities of oil during this short period. This is not to mention the sharp competition that the additional quantities of oil made available in the market will cause with the other oil-exporting countries, the problems regarding the distribution of oil quotas between Iraq and the other member countries in OPEC notwithstanding. It is thus clear that by merely starting to execute this plan, new horizons will be opened for this global industry, despite the fact that this will cause regional problems with Iraq's neighbouring countries. Meanwhile, it is being anticipated that the establishment of a new organization for natural gas exporting countries, or what is now being called “Gas OPEC”, will also soon leave its mark on the global gas industry. Despite it being difficult to determine how important this organization (to be headquartered in Doha) will be, or its influence on the near-term gas marketing contracts – given the nature of the long term contracts – it is expected that this organization will gradually move future contracts in the direction of having similar pricing policies, and to try and separate the pricing of natural gas from that of crude oil. There is also in both the short and long terms the prospect of increasing Russian oil production. As it is known, the production rate of the Soviet Union prior to its collapse was 12 million barrels per day; however, this rate deteriorated during the mid nineties to about four to five million barrels per day. Then in 2009, this rate rose notably and reached the figure of around 10 to 11 million barrels per day. However, the question that arises here is: will Russia be able to maintain this high production rate, given that most of this oil comes from old oil wells, and not from newly discovered ones? As it is expected, and given the differing assessments regarding the best and fastest approach to end the global financial crisis, there are many varying crude oil demand forecasts for the year 2010 and subsequent years. As such, the IEA's forecasts are among the most optimistic, as their studies indicate that there is a possibility for oil demand to increase by about 1.5 million barrels per day in 2010, i.e. a 1.7 percent increase, in case the GDP across the world rises by about 3.1 percent. At the same time, OPEC's estimates indicate that the forecasted increase in oil demand in 2010 will be 820 thousand barrels per day, or an increase of 1 percent, based on the assumption that the global increase in the GDP will amount to approximately 2.86 percent. It should be mentioned here that both organizations are assuming that there will be a high economic growth among the non-member countries of the OECD, which means that the forecasts involve growth outside of Europe and North America. Furthermore, OPEC estimates that demand will shrink in Western industrialized countries by about 130 thousand barrels per day, due to the fragile recovery from the global financial crisis. *. Mr Khadduri is an energy expert
