KUWAIT -- Stability in the oil market can only be achieved through securing both supply and demand, which are two sides of the energy security coin, said the Organization of Arab Petroleum Exporting Countries (OAPEC) on Thursday.
In its monthly bulletin, OAPEC said that it was following closely the oil market developments and that it hoped that 2010 would see full revival from the global economic crisis.
"This will no doubt have a positive impact on our member states, which are working hard to invest their oil revenue to push forth development, and to provide the necessary oil supplies to consumer countries at prices that are acceptable to both sides of the oil equation. This matter can only be realized through consolidating dialogue between the oil producing and consuming countries," the report said.
It added that the previous year saw many developments that left clear prints on the oil market, noting that 2009 witnessed a drop in all main indices of the oil market because of the global economic crisis.
According to the report, the global economy was still suffering from the greatest and most widespread recession since 1940, with the global economic performance in 2009 shrinking by 1.1 percent, and the economies of industrial countries by 3.4 percent. OAPEC also said that for the first time since the early 1980s, global demand on oil dropped for two years in a row, coming to 84.3 million barrels per day (bpd) in 2009 at a decrease of 1.6 percent, compared to a decrease of 0.3 percent in 2008. Oil supplies also dropped 1.7 percent and came to 84.5 million bpd in 2009.
Moreover, it said that despite the upward trend of the basket of crude of the Organization of Petroleum Exporting Countries (OPEC) at the end of 2008, the annual average for 2009 decreased by USD 33 and came to USD 61 per barrel (pb), compared to USD 94.4 pb in 2008.
It added that OPEC's decisions throughout 2009 to maintain the production quotas of the year before, when the production was cut to 4.2 million bpd, contributed greatly to the maintenance of the stability of the oil market.
However, the report noted that one of the negative aspects of the drop in oil prices on OAPEC states was that the value of oil exports came to USD 277 billion in 2009, compared to USD 585 billion in 2008, at a drop of almost 50 percent.
This drop in oil value, it added, had a profound impact on investments in oil projects and their financing.
The one exception to this drop, it noted, was the increase in commercial reserves in industrial countries, which came to 2.774 billion barrels by the end of the third quarter of 2009, enough to cover 61 days of consumption, thus surpassing the average recorded over the past five years by 10 percent.
The OAPEC report said that the state of uncertainty that currently prevailed was expected to cast its shadows on 2010, making prospects for development in the oil market a great challenge.
It noted that OPEC's projections expected an increase in global demand on oil by 500,000 bpd in 2010, bringing the total to 84.3 million bpd, compared to an average of 1.6 million in the five years prior to the recession.
OAPEC also predicted a 2.3 percent growth in global economy in 2010, compared to a shrink of 1.1 percent in 2009, while at the same time expecting oil supply outside OPEC to increase by 300,000 bpd to stand at 51 million in 2010, meaning that demand on oil and liquid gas from OPEC this year would not exceed 33 million bpd.
Furthermore, it said that climate change, government policies, unexpected technical problems, the state of uncertainty that affected oil supplies from outside OPEC, the current economic climate, and the fluctuating oil prices would continue to affect prospects.
