Gasoline and diesel prices in GCC countries and the rest of the Middle East will continue to increase in the coming months, says the Gulf Research Center’s (GRC) Oil Report – Third Quarter (Q3) 2005. The report also predicts that inflation rates will increase in all GCC countries.
Other highlight predictions are:
• Severe winter in the US and Europe might bring oil prices to new records in the fourth quarter. If this winter turns out to be a severe one, there may be prices and shortages for the record books!
• It might take until the next hurricane season to restore US crude oil and products production in the Gulf of Mexico (GOM). It might take even longer, if hurricanes in the GOM create a class of "discouraged companies," especially, in light of predictions suggesting that strong hurricane seasons may last until 2015.
• Some OPEC members will add more oil as they inaugurate new projects. But with a cold winter expected in many regions, this added production will not be enough to meet growing demand.
• A caution that the increase in gasoline prices in GCC countries and the rest of the Middle East is not the result of economic reforms, but effort by various governments to reduce the burden of subsidies; the latter increased in line with rising world oil prices.
• The recent decline in September demand for gasoline in the US is temporary. The evacuation of more than one million people from the New Orleans area and the flooding of tens of thousands of cars, may have caused a significant decrease in demand for gasoline.
The GRC report concludes that despite increased production claims by some OPEC ministers, OPEC production increased by only 250,000 b/d in the third quarter. Iraq, which is not subject to OPEC quota, accounted for about half of this figure.
