x Abu Dhabi, UAEThursday 20 July 2017

Gulf's oil consumption growth to slow

Growth in oil consumption in the GCC and Iran will slow this year to less than a third of the rate recorded in 2008.

Growth in oil consumption in the GCC and Iran will slow this year to less than a third of the rate recorded last year, a prominent energy consultancy said Tuesday. Oil demand in the region is expected to grow by 106,000 barrels per day (bpd), down from 363,000 bpd last year, according to a report by PFC Energy, a consultancy based in Washington. The new estimate represents a downwards revision of more than 30 per cent from the firm's earlier forecasts, largely as a result of lower diesel consumption in Iran. The figures suggest the Middle East may lose its place as a key centre of demand growth in the world oil market. "The one country which is causing a drag on regional projections is Iran, where demand has apparently declined in the first half of 2009 compared to the same period last year," PFC said. The decrease in Iran could be attributed to lower use of diesel in power generation and the introduction of a diesel "smart card" system that gives each buyer an allotted amount, said Raja Kiwan, the report's author. The smart card system has sharply reduced the amount of diesel smuggled out of the country, which PFC estimated was previously at least 15,000 bpd. "Demand was already weaker this year due to more natural gas supplies and lower consumption in transport," Mr Kiwan said. "The political events will exacerbate this trend." Oil consumption in Iran will grow by about 30,000 bpd, down from last month's estimate of 61,000 bpd, and could fall lower as a result of recent political turmoil and its potential to disrupt the economy. The PFC estimate agreed with forecasts of lower Iranian demand by the International Energy Agency (IEA), said Eduardo Lopez, the IEA's demand analyst. "It's somewhat weaker in the second quarter of this year," Mr Lopez said. Both groups expect oil demand to grow more slowly across the region, with the IEA predicting about 100,000 bpd. Growth could rebound to 300,000 bpd next year, Mr Lopez said. Saudi Arabia's consumption will grow by 54,000 bpd, down from 124,000 bpd recorded last year, according to PFC, while oil demand in the smaller GCC markets, including the UAE, is expected to increase marginally. Oil demand is expected to fall by 4,000 bpd in Dubai and rise by 8,000 bpd in Abu Dhabi. cstanton@thenational.ae