Brazil’s Benefit of Costlier Oil: More Sales to Arabs

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The price of the WTI (West Texas Intermediate crude, a type of oil used as a price benchmark) barrel of oil rose from US$ 43.35 at the end of 2004 to US$ 60.90 in December last year.

The increase in the price of the commodity on the foreign market, which reached 40%, powered the entry of funds into the Arab world, a region that houses some of the largest producers of oil in the world.

This year, oil should continue appreciated and should generate further income to the Arab nations.

Analysts bet on an average price of US$ 65 per barrel of oil in 2006. This is the forecast made, for example, by Brazilian consultancy GRC Visão. That is, the increase should be lower than last year, but should be around 7%.

"The demand for oil is going to continue growing, especially in China and the United States," stated the secretary general of the Arab Brazilian Chamber of Commerce, Michel Alaby.

The director of the Brazilian Infrastructure Sector center (Cieb), Adriano Pires, recalls that the offer of the product is growing at lower rates than the demand. He believes that the price of the barrel may rise between US$ 1 and US$ 2 this year.

What may change this scenery, however, according to Pires, increasing the price of oil to over US$ 100, is a worsening of the conflict between the United States and Iran, the fourth largest producer of oil in the world.

The US Department of Energy, however, is still considering a scenery of WTI oil prices at around US$ 63. According to Alaby, with the price increase, the economy of the Arab countries that are producers of oil will go on growing.

"They tend to buy more, to improve quality of life," stated the secretary general. Alaby believes that one of the areas in which they will continue investing this year, using the funds coming from oil, will be the area of construction.

An increase in income in the Arab world will benefit the countries that export to the region, as is the case with Brazil. Saudi Arabia, for example, is the largest producer of oil in the world.

Last year the Saudis purchased US$ 1.2 billion in Brazilian products. Purchases grew 45.8% when compared to the previous year. The Saudis, like the Algerians, also export oil to Brazil.

According to Adriano Pires, the increase in oil prices should not bring great problems to the domestic market, as Brazil is heading to self-sufficiency in oil.

For Brazil to supply its own oil needs, the country must produce 1.8 million barrels of oil a day. Last year, the average production was around 1.69 million barrels.

According to forecasts by the Department of Energy of the United States, the countries that are members of the Organization of the Petroleum Exporting Countries (OPEC) are going to have revenues of US$ 521.9 billion with the commodity in 2006.

Last year they had revenues of US$ 473.1 billion. Among the members of OPEC are Arab countries like Iraq, Kuwait, Saudi Arabia, Qatar, the United Arab Emirates, Algeria and Libya.

Anba – www.anba.com.br

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