NBK organizes a symposium on oil developments and their regional repercussions for the present and future

NBK's chairman, Mohammad Abdul Rahman Al-Bahar, said that leading regional and global experts and policy makers will participate in discussions of key developments shaping the current and future oil scene. Participants will also address issues pertaining to oil reserves and sustainability of production in the long-term, market trends and geopolitical risks, as well as oil markets stability and security of energy supplies.

Oil prices had soared during the past three months, surpassing their previous highs following the Iraqi invasion of Kuwait in 1990. OPEC's basket of crudes broke $46 per barrel while Brent reached $52 in late October, both rising by more than 50% since the start of the year. Kuwait's heavier export crude rose by a relatively smaller percentage to approach $39.
Escalating prices were propelled by strong growth in global oil demand, particularly from China and other developing countries in Asia, even as oil supplies rose steadily, with OPEC production reaching a 25-year high. Mounting concerns about the availability of sufficient excess production capacity were exacerbated by disruptions -albeit brief- to oil supplies from Iraq and the Gulf of Mexico, or threats to the regular flow of exports from Nigeria and Russia. With incremental capacity estimated at a mere 1%, primarily in Saudi Arabia and to a lesser extent Kuwait, markets will remain vulnerable to threats of possible supply shortages due to weather, political, sabotage or even technological factors.

Currently, Kuwait and other Gulf oil-producing countries are witnessing an economic boom on the back of surging oil revenues that facilitated the pursuit of expansionary fiscal policies. Kuwait reaped a budget surplus of KD 1.4 billion during fiscal year 2003/2004, while NBK expects the surplus for the current fiscal year 2004/2005 to reach a record KD 3.7 billion.
In the meantime, government expenditures increased by 12% last year, a pace likely to continue this year in light of the government's ambitious development programs. Such conditions have created a general sense of confidence that the environment will remain positive and attractive for private investments.

Al-Bahar indicated that NBK's objective behind organizing this conference is to assist local investors and business community in developing a better understanding of what is driving oil prices higher, how long will these forces continue to exert pressure on prices, what are the various long-term perspectives on prices and the industry in general, and what sort of risks threaten the general outlook. Al-Bahar expressed his hope that the discussions will help investors develop practical strategies based on a clearer picture of future opportunities, threats and overall investment environment.