The uprisings in the Middle East mean the immediate prospects of lifting distortive fuel subsidies in the Gulf states are remote, even as increasing government spending drives up the region’s runaway energy consumption, analysts say.
Khalid al-Falih, the head of Saudi Aramco, the kingdom’s state-owned oil group, said last year that domestic energy demand was expected to rise from 3.4m barrels a day of oil equivalent last year to about 8.3m b/d of oil equivalent by 2028.
That could mean that the kingdom will not be able to export more than 7m barrels of oil a day by 2028, if no additional investment is made, says John Sfakianakis, chief economist at Banque Saudi Fransi in Riyadh. Output capacity stands at 12.5m b/d today, he says.
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