Demand for oil could fall by 45%, says Saudi official

Dubai: Oil demand could fall 45 per cent due to the global financial crisis, but investments should be increased to ensure supplies are maintained, a senior Saudi government official said in remarks published on Thursday.

Majid Al Munif, an adviser to Saudi Arabia's oil minister, said the global financial crisis may cut oil demand by 23 per cent to 45 per cent, the pan-Arab daily Al Hayat reported, citing remarks made at a conference on Wednesday. World oil demand fell by 50,000 barrels per day in 2008, and is predicted to fall 450,000 bpd this year, the United States Energy Information Administration said in a report in December.

Cooling demand was led by a 1.2 million bpd contraction in top consumer the United States in 2008, and another 200,000 bpd drop is likely this year. The last time world petroleum demand fell was in 1983, part of four years of straight declines in oil consumption that began in 1980, the agency said.

The weak economy and lower oil demand has already caused US crude oil prices to sink more than $100 [Dh367] from a record $147 a barrel in July - a slump that has forced Opec to take 4.2 million bpd of oil off the market in an attempt to reduce bulging global crude inventories and stabilise oil prices.

Opec has long stressed the need to keep oil prices stable to ensure long-term investment in the energy industry.

Last month Saudi Arabia's oil minister Ali Al Nuaimi said the country will continue to invest in upstream and downstream energy projects despite the world econ-omic crisis, but the kingdom's mega projects would not be enough on their own to meet the world's energy needs. Oil traded lower yesterday, falling below $42 a barrel.