The most recent monthly oil market report issued by OPEC, which happens to be the last report to be published before the convening of the organization's ministerial meeting next Wednesday, indicates that the OPEC Reference Basket has dropped by nearly four percent last February, reaching $ 72.99/b. The organization attributed this decline to the growing concern about the economic recovery triggered by sovereign debt issues in the Euro-zone, particularly in Greece. However, the organization added in its report that market sentiment changed recently amid more positive economic data and rising equities, which provide support for crude prices as well. Following these developments, the OPEC Reference Basket rose to $77.86/b on 8 March before settling down to $77.38/b on 8 March. This is while noting that this price rose again recently, shortly before the organization's ministerial meeting. As for the developments concerning the world economy, the organization forecasts that growth in 2010 will be 3.4% growth, compared to 0.9% in 2009. In the US, economic growth has been forecasted to stand at 2.4%, and in Japan, growth is estimated to be 1.3%. In the emerging market countries, high growth rates are forecasted, with China expected to have an economic growth of 9.3%. According to OPEC's report, the global economy at present continues to be mostly supported by the governmental-led stimulus for local economies. However, the report warns at the same time of some negative factors that can adversely impact the global economy, in particular the level of public debt in OECD countries, the record-high unemployment levels across the globe and the risks of inflation in China. Such an interest by OPEC in the affairs of the global economy, and its close monitoring of its developments and variables, are not without significance, especially in terms of their effects on demand for oil and on production levels that the organization will decide for its member states. Moreover, such an interest is particularly compelling in the direct aftermath of the global financial crisis, in particular on the level of the disparity in the effects of this crisis on countries around the world, or in the attempts of the latter to curtail its damages (such as the high level of public debt or the record level of unemployment in certain countries). Based on global economic growth rates, OPEC expects the world oil demand to grow by 900 thousand b/d in 2010, following a contraction of 1.4 mb/d in 2009. Despite this increase in demand rather than its decrease, it is known that an annual increase in demand less than one million barrels per day is considered to be low. According to the report, “Oil demand has been highly dependent upon the pace of the global economic recovery. OECD demand is still expected to remain at negative growth around 0.15 mb/d, while non-OECD demand is projected to grow by 1.0 mb/d, driven by China and the Middle East region.” In truth, the information published by many specialized petroleum bulletins indicates that demand in China exceeded demand in Japan in 2009, rendering China the second largest oil consuming country in the world after the United States. Also, India overtook South Korea, and became the third largest Asian oil consumer, driving South Korea to fourth place. Furthermore, China imported around four million b/d in 2009 (the year of the global financial crisis), or an increase of about 14 percent in 2008. At the same time, the refining capacity in China increased to about eight million b/d, in order to meet the growing domestic demand. As is known, several Arab national oil companies have entered into partnerships with their Chinese counterparts to build new refineries. In India, there is a large project to construct new refineries, with a combined capacity of nine million b/d to cater to domestic consumption and also for exportation into the Asian markets. However, what is rather a new phenomenon in the global markets is the increase of domestic oil demand and consumption in the oil producing countries themselves, in particular the Arab Gulf countries which managed to overcome the global financial crisis. In fact, the governments in these countries injected billions of dollars in their local economies, with a view to sustain the recovery of their national economies and not leaving them vulnerable to the global financial crisis. Sources in the oil industry are estimating that the increase in the oil consumption in the Arab gulf countries in 2010 will amount to 230 thousand barrels per day, including about 190 thousand in Saudi Arabia alone. This increase in the demand for oil in Saudi Arabia is attributed to the large increase in the fiscal budget and also to the work on the construction of six new economic cities in the Kingdom presently underway. *. Mr. Khadduri is an energy exper
