Muscat: The price of crude oil in the international market is likely to remain steady, despite the sluggish global economic recovery. The global crude oil demand is expected to increase by 0.8 million barrels per day (mbpd) to 89.6mbpd in 2013, driven by Asia, Latin America, Africa, and the Middle East, said Sankar Kailasam, Head of Asset Management at Gulf Baader Capital Markets, while making a presentation on the regional economic and market outlook.
Decline in oil imports
"We have noted a decline in oil imports by the United States and Organisation for Economic Cooperation and Development (OECD) countries. However, this was more than compensated for by China and other Asian countries," he added during the presentation, which was attended by high-profile businessmen, chief executives, and finance professionals.
He pointed out that the demand for Organisation of Petroleum Exporting Countries (Opec) crude is forecasted to average 29.6mbpd this year, indicating a decline of 0.4mbpd compared with last year.
Kailasam said the International Energy Agency (IEA) projects that Brent and WTI crude-oil prices will average $105 per barrel and $89 per barrel this year, respectively. The International Monetary Fund (IMF) estimate for average crude prices stands at $106 per barrel.
Elaborating on the factors that could influence crude prices in international markets, he remarked that the sluggish global economic recovery remains a concern for the world demand outlook, and the future economic prospects of OECD Europe and OECD Pacific remain uncertain. Also, China's latest economic data has been encouraging.
As far as GCC countries are concerned, he explained that oil exports are projected to increase to historic levels of $700 billion, well above the levels in 2007. The six-member GCC region's combined nominal gross domestic product (GDP) will touch $1.534 trillion this year, and the robust fiscal spending will support the non-oil GDP.
The real GDP growth of the GCC states is projected to grow by 3.7 per cent this year.
Sankar said the overall GCC fiscal surplus is estimated at 11.2 per cent of the GDP, and the current account surplus is estimated at 21 per cent of the GDP in 2012.
He also noted that the inflation rate in GCC countries will remain at 3.6 per cent this year. Risk remains in the form of a further decline in the global economy, which could lead to a drop in oil prices.
"A 10-per cent drop in oil price will reduce the Mena oil exporters' surplus by $150 billion," he added.
As far as 2012 is concerned, the oil GDP of GCC countries, which possess 40 per cent of the world's proven oil reserves, is estimated to grow by 5 per cent, while the non-oil GDP may increase by 4.5 per cent. The current account surplus will remain high.
While Qatar showed high growth levels, owing to investments in the gas infrastructure, Saudi lags in growth, owing to restrictions in capital markets and relatively less openness to doing business.
Gerhard Schwarz, Head of Strategy at Baader Bank AG, and Pradeep Asrani, Managing Director of Gulf Baader Capital Markets, also addressed the meeting.