Dr. Sami Alnuaim This week witnessed a positive rebound in oil prices as a strong signal to the disappearance of the geopolitical factors that lately influenced trades in the oil markets, where the price of Brent crude — the North Sea Blend — closed for three consecutive days above $104.4 per barrel (Wednesday). This rebound confirms previous expectations and reports, which pointed to the continued stability of oil prices in the global markets in the near term and expected it to be close to the average price preferred by the major OPEC oil producers ($100 per barrel). These studies also predicted the average annual price for Brent crude to reach $105 per barrel during 2013 These reports and predictions are based on several positive indicators, including the continued positive and shying recovery of the global economy (excluding the European sector) and high oil production by producing countries outside OPEC, mainly the US and Canada. This slight production increase gives a positive emotional influence to the market with a quantity that does not lead to major crude surplus in the market that could negatively influence the price especially when we consider the fare and good production stability from OPEC countries. This positive outlook that dominated the oil market over the past six months has helped to stabilize oil prices during this period, with acceptable fluctuation +/- as a reaction to some of the factors that are beyond the oil market control and dominated mainly by geopolitics. Also, despite of some reports by the International Energy Agency (IEA) that predicted a -1% annual consumption in OECD countries in the next two years (OECD represents 30 developed countries, mostly in Western Europe, North America and Japan), this slight decline does not represent a challenge to the oil market due to the presence of a higher annual consumption increase (3%) in the developing countries outside of the OECD organization, mainly China, India and the Arab Gulf states. This gives the oil market some balance and the ability to absorb any slight surplus in production; hence some price stability. The big challenge remains in some developing countries, especially the GCC Petroleum Exporting Countries, to arrest the domestic oil consumption rises. This steady and unacceptable increase will adversely affect the quantities of oil exported and do not lead to a direct increase in the rates of economic growth for these countries because of government subsidies and support to the energy sector and low energy efficiency and intensity. It is important here to mention the positive momentum and efforts currently undertaken by some of GCC governments to reduce the large energy wastage through energy conservation and renewable energy sources projects, especially solar. Unfortunately some of these countries will not realize the benefits of these efforts in the short term due to the slow pace of implementation and the absence of national energy strategic plan that oversees all of these efforts and unite them under one umbrella with common goals and strict accountability. Before I conclude, I would like, on behalf of all Saudi petroleum engineers, to take this opportunity to send my greetings and congratulation to the Custodian of the Two Holy Mosques King Abdullah Bin Abdulaziz Al Saud (the Chairman of the Saudi Petroleum Council) on the occasion of the eighth allegiance anniversary, promising him and the country that we will work hard to fulfill our countries' energy vision. — Dr. Sami Alnuaim is a Saudi writer and can be reached at twitter:@neaimsa. His articled can be followed at www.saudienergy.net
