Saudi Arabia will continue to play a leading role in maintaining the global stability in the short and medium term, Asiya Investments, an Asia-focused investment company said. In the long term, Saudi Arabia’s importance will be as equally , it noted.
The expansion of shale gas technology in the US will certainly change the global oil map, transforming the US into an energy self-reliant economy. But Saudi Arabia will see growing demand from Asian economies.
According to the IEA, emerging Asia is expected to make up half of the world’s increases in oil demand between now and 2040. So in the long run, expect Saudi Arabia, along with the rest of the GCC, to start looking eastward.
Ever since 2011, Brent oil has been trading at above $100 per barrel and, had it not been to Saudi Arabia’s intervention to step up production, prices would have been much higher. Like any other commodity, global price of oil has witnessed many changes in the last decade, but the level of prices in the last two years is unusually high by historical standards. The price of the barrel was always below $40 before 2004. Since then tight markets and fast growing Asian demand pushed prices up until reaching an all-time high of $143.6 per barrel on July 3rd 2008.
Camille Accad, economist at Asiya Investments, said the global financial crisis brought about a strong correction in which prices fell more than $100. Prices started to recover soon, in spite of the relatively weak global recovery. Supply side tensions were the main reason behind these high prices.
Copyright, Saudi Gazette, 2013.