Supply, Demand and Reserves - the Oil market towards 2010

Author: Peter Maass

The largest oil terminal in the world, Ras Tanura, is on the eastern coast of Saudi Arabia. From Ras Tanura's control tower, you can see the totems of oil's dominion - supertankers coming and going, row upon row of storage tanks, and miles of pipes. I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand - most notably in the US and China - which has strained the capacity of producers, especially Saudi Arabia, the largest exporter.

Unlike the 1973 crisis, when the embargo by the Arab members of the Organisation of Petroleum Exporting Countries (Opec) created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough to go around.

As Aref al-Ali, my escort from Saudi Aramco, the giant state-owned oil company, pointed out: "One mistake at Ras Tanura today, and the price of oil will go up." This has turned the port into a fortress; its entrances have an array of gates and bomb barriers to prevent terrorists from cutting off the black oxygen that the modern world depends

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