RIYADH: This year could mark a turning point for oil demand as use in emerging countries catches up with the developed world, top exporter Saudi Arabia said on Monday, while voicing concern speculation could push prices higher. "Global oil demand is expected to rise between 1.5 million to 1.8 million barrels per day this year," Ali Al-Naimi told an industry conference in Riyadh. The figure is higher than the forecast of the International Energy Agency, which represents consumers. This increase would mainly be driven by Asia — particularly China and India — as well as the Middle East and Latin America. "The year 2011 might mark an important turning point in this direction as the level of oil demand in the emerging economies and developing countries is nearing demand in OECD countries and will even exceed demand in OECD by 2013," he added. Already China is the world's second biggest oil user after the United States and Asia is Saudi Arabia's main export market, taking around 60 percent of its shipments. "(This is) a percentage that is expected to rise during the coming years," Naimi said. Even with strong Asian demand, Naimi said he expected oil prices to stabilize this year. However, he reiterated concern OPEC has repeatedly expressed that factors other than the balance of supply and demand could boost the market. "I expect prices to continue to be stable at last year's rates (levels)," Naimi said. "The only thing that I'm concerned about is the pressure exerted by speculators, analysts and some investors in the futures market on prices to push them up or down away from market fundamentals." OPEC versus non-OPEC Naimi did not specify what OPEC's policy response might be, but said supplies from the Organization of the Petroleum Exporting Countries could rise over time as the rate of growth in non-OPEC supply slowed. "This will give OPEC the opportunity to boost supplies to the global market," he said. Naimi declined to say how much Saudi Arabia was producing, but said its spare capacity was likely to be around 4 million barrels per day (bpd) this year, while OPEC spare capacity as a whole was likely to stay around 6 million bpd. The kingdom has capacity of 12 million bpd, or 12.5 million bpd including the neutral zone. Reuters latest survey found Saudi Arabia was pumping around 8.25 million bpd, compared with an implied target of 8.05 million bpd. Industry sources with long-term contracts have said this month they have received steady supplies from Saudi Arabia. Overall OPEC output has increased informally as other members have slipped further and further away from agreed limits as the market has recovered from a slump at the end of 2008. In December, discipline had fallen from delivery of 54 percent of promised curbs to 55 percent, Reuters found. A widespread rally across commodities gathered momentum in the final part of last year and into the start of this year. Brent hit a peak early this year of $99.20, while U.S. crude rose to $92.58. Both levels were 27-month highs and are above the $70-$80 a barrel Saudi Arabia has stated is the right price for producers and consumers. Analysts have attributed the price rise to the United States' policy of quantitative easing and dollar weakness as well as expectation of rising demand. Although the higher prices have increased the pressure on OPEC to increase supply, so far it has implemented no formal changes to a policy intact since December 2008. Additional reporting by Asma Alsharif.
