Saudi cautious on oil plans as demand uncertain

Saudi Arabia’s reluctance to commit to boosting oil production capacity beyond 2009 is a response to the potentially huge impact on future demand of energy efficiency, alternative fuels and high prices.

Demand uncertainty is providing little incentive for oil producers to risk investing billions of dollars on long-term projects to boost capacity, as they worry it will lie idle.

“This is a major concern for producers,” said David Kirsch, manager of market intelligence at Washington-based consultancy PFC Energy.

“If you assume certain conservation measures, alternative fuels and the introduction of some form of carbon limiting legislation, you could take as much as 6 million barrels per day (bpd) off global demand by 2015.”

Reuters