Saudi Arabias Domestic Crude Consumption Increases 11% in May
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Saudi Arabia, the worlds largest oil producer and exporter, which last month pumped 9.7m barrels a day, the second highest level in three decades, could soon become one of the top oil consumers.
The worlds largest crude exporter consumed an average 1.98 million barrels a day of oil this year, compared with 1.78 million barrels, Saudi figures posted on the Joint Organization Data Initiative website yesterday showed.
The emergence of Saudi Arabia as an important consumer sets a critical new trend that could have profound implications for oil prices over the next few years. As the kingdoms oil demand surges, the exportable surplus narrows, tightening global oil markets.
The country is on course to consume an average of 2.81m barrels a day this year, making it the worlds sixth-largest oil consumer behind the US, China, Japan, India and Russia. On a per capita basis, its oil consumption is sky high. This year, consumption is set to jump by 5.6 per cent against the global average of 1.4 per cent.
Saudi oil demand has risen by 75 per cent in the 10 years since 2001 due to strong economic and industrial growth and subsidised prices. The strong surge contrasts with the more modest increase of 39 per cent in the 1990-2000 period.
Contributing most to the strong growth over the past decade is the rising direct burn of crude oil for power generation, which is likely to reach nearly 600,000 b/d this summer. Instead of burning natural gas or fuel oil, Saudi Arabia uses unrefined crude oil. Electricity consumption in the Gulf explodes during the summer air-conditioning season when temperatures peak above 40C.
The International Energy Agency, which recently reviewed Saudi direct burn of oil for power, says that it averaged less than 200,000 b/d in the early 2000s, but more than doubled to about 450,000 b/d in 2009. At that time, many observers thought that Riyadh was burning more oil as global oil demand had collapsed due to the global financial crisis. But direct crude oil burning continued to rise in spite of the global economic recovery.
The IEA now estimates that Riyadh will burn on average 581,000 b/d this year (with a peak of 740,000 b/d between April and September). To put that consumption in context: Ecuador, the smallest member of the Opec oil cartel, produces about 500,000 b/d on average, and Qatar pumps about 800,000 b/d.
The surge in oil demand during the third quarter, when temperatures peak in Saudi Arabia, is so intense that the kingdom almost matches the level of consumption in that period in India and Russia, the fourth- and fifth-largest consumers. As such, it is no wonder that Riyadh is boosting oil production. It currently needs it itself.
The Financial Times Limited 2011.
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Saudi Arabia, the worlds largest oil producer and exporter, which last month pumped 9.7m barrels a day, the second highest level in three decades, could soon become one of the top oil consumers.
The worlds largest crude exporter consumed an average 1.98 million barrels a day of oil this year, compared with 1.78 million barrels, Saudi figures posted on the Joint Organization Data Initiative website yesterday showed.
The emergence of Saudi Arabia as an important consumer sets a critical new trend that could have profound implications for oil prices over the next few years. As the kingdoms oil demand surges, the exportable surplus narrows, tightening global oil markets.
The country is on course to consume an average of 2.81m barrels a day this year, making it the worlds sixth-largest oil consumer behind the US, China, Japan, India and Russia. On a per capita basis, its oil consumption is sky high. This year, consumption is set to jump by 5.6 per cent against the global average of 1.4 per cent.
Saudi oil demand has risen by 75 per cent in the 10 years since 2001 due to strong economic and industrial growth and subsidised prices. The strong surge contrasts with the more modest increase of 39 per cent in the 1990-2000 period.
Contributing most to the strong growth over the past decade is the rising direct burn of crude oil for power generation, which is likely to reach nearly 600,000 b/d this summer. Instead of burning natural gas or fuel oil, Saudi Arabia uses unrefined crude oil. Electricity consumption in the Gulf explodes during the summer air-conditioning season when temperatures peak above 40C.
The International Energy Agency, which recently reviewed Saudi direct burn of oil for power, says that it averaged less than 200,000 b/d in the early 2000s, but more than doubled to about 450,000 b/d in 2009. At that time, many observers thought that Riyadh was burning more oil as global oil demand had collapsed due to the global financial crisis. But direct crude oil burning continued to rise in spite of the global economic recovery.
The IEA now estimates that Riyadh will burn on average 581,000 b/d this year (with a peak of 740,000 b/d between April and September). To put that consumption in context: Ecuador, the smallest member of the Opec oil cartel, produces about 500,000 b/d on average, and Qatar pumps about 800,000 b/d.
The surge in oil demand during the third quarter, when temperatures peak in Saudi Arabia, is so intense that the kingdom almost matches the level of consumption in that period in India and Russia, the fourth- and fifth-largest consumers. As such, it is no wonder that Riyadh is boosting oil production. It currently needs it itself.
The Financial Times Limited 2011.
