Higher oil demand to return by 2010

American foreign policy in the Middle East, on the other hand, must play a more decisive role in reducing the volatility of oil prices.

"In the longer term, supply will be challenged and once we get out of this recession, we might even go back to 2005 and 2006 prices."

said Dr. Sadad Al Husseini, former Executive Vice-President for Exploration & Production, ARAMCO.

"The more oil prices will go down now, the higher its price will go up after this recession," said Dr. Herman Franssen, Senior Associate, CSIS Energy and National Security Program, and President, International Energy Associates.

"The growth in oil demand coming from Asia and the Middle East could offset any decline in the United States," he added.

Panellists agreed that American foreign policy will play a key role in determining the price of oil going forward.

"Oil has been a key factor in US foreign policy since the Nixon years," said Raja Sidawi, Chairman, Energy Intelligence.

"We have been living for several years under the risk of war which has led, in part, to the volatility of prices," he added.

"Political stability is instrumental in bringing about more oil production from this region," said Franssen. "US policy towards Iran, Iraq and Palestine will be instrumental here," he added.

When asked to comment on the advent of US president-elect Barack Obama, panellists agreed that US policy in the Middle East was due for a change.

"American foreign policy towards the region will be in the direction of seeking solutions," said Franssen. With regard to a specific energy policy, Nader Sultan, Chairman, Ikarus Petroleum Holdings and former CEO of Kuwait Petroleum Corporation said:

"If Mr. Obama has a clear energy policy and implements it, it is a great first step. We haven't had a US energy policy in the last 20 years."

Vis-à-vis the potential for alternative energy sources to have an immediate impact on oil demand, panellists agreed that the effect, if any, would be minimal.

"The car market is approximately 70 million cars per year and these will not be replaced by hybrids anytime soon," said Franssen.

When asked to explore projections for the next three years, panellists had varying responses.

"America is the consumption engine of the world, if the economy stays depressed, so will oil prices," said Franssen.

"The price of oil will depend on a rational and diligent US foreign policy," added Sidawi.

"Oil prices may also depend on breakthroughs in technology," said Sultan.