Will the oil price reach $100-a-barrel in 2006?

The supply and demand dynamics of the oil market remain unchanged. Saudi Arabia repeatedly promises sufficient crude to balance the market, but that is not really the issue.

For the problem is a shortage of refinery capacity around the world. Present refineries are ageing and working at full capacity. To design and commission new ones will take at least five years, and most probably a lot longer given environmental and other considerations.

On the other hand, demand continues to surge with the Chinese and US economies still growing strongly, and even Germany and Japan showing signs of picking up speed. There is an immediate correlation between economic growth and demand for energy.

AME Info