After a weekend of fun with friends and families, yours truly is back amongst the midst of writing the blog. The weekend had thrown in the usual excitement of the English Premier League which saw Manchester City losing ground on their championship hopes by drawing their match. With due respect to the city fans around, I must confess that I was thrilled by the result which meant it is up to Manchester United to lose the title. In other words-there are the masters of their own destiny now. Having escaped the April Fool Syndrome (for a change), investors have begun this week with a reality check in mind-the oil prices.

Most of the investors know why the oil prices outlook is high. The long term trends including the meager supply and the soaring demand from China and other economies are the major reasons for the hike. And in the short term, the market is extremely tight, supplies have been disrupted and Iranian dilemma is making everyone nervous. The world’s largest oil producer, Saudi Arabia, is the best hope of keeping the markets stable. The Saudi’s restated their pledge to keep the market well supplied as American and European Union sanctions hit Iran.

Yet, the numbers coming out of the fastest growing economy on its thirst for oil has been mindboggling. Between 2000 and 2010, China increased its consumption of oil more than any other country, by 4.3m barrel per day, a 90% jump. It now gets more than 10% of the world’s oil! The explanations for the growing interest in oil include the demography, populations in the Persian Gulf and in the OPEC nation which is growing fast.

The longer-term picture is equally worrying. Global demand for oil is projected to rise to over 100m barrels per day by 2030-a staggering figure! The Gulf States of Saudi Arabia, Iran and Iraq, which have vast and easily accessible reserves, are regarded as the obvious sources of new supply. But Iranian oil production will decline as sanctions bite and the country loses access to equipment and expertise. Iraq, currently producing 3m barrel per day, has the reserves to increase production significantly. But fragile politics, dodgy security and a battered oil infrastructure are deterring the investment required to boost supplies. And Saudi Arabia’s thirst for its own oil shows little sign of abating. The Gulf is usually seen as the answer to the world’s oil problems, but it looks ever more like a question-mark instead at the moment. Watch this space for more updates!