The UAE and Qatar will lead the 18 million barrels a day growth in oil demand in the Gulf in 2009, energy analysis firm PFC energy said in its latest report.

The Washington-based company said diesel and jet fuel will lead the overall growth in demand for fuel oil in the GCC in 2009.

The growth in demand though 30 per cent lower than the figures in 2007-2008, would come when countries across the world will see a fall in demand.

PFC energy identified three factors that will contribute to the growth in demand for oil in the Gulf: Good performance of aviation industry, easing of credit on the back of government stimulus plans and direct funding of some of the prominent projects by the government.

"An easing of credit or direct government funding of some of the largest projects could set plans back on track, providing the impetus for higher rates of growth for diesel consumption.

"The region's aviation industry is set to fare comparatively well throughout 2009, having established a core and growing base of customers in their higher margin long-haul routes, helped along too by lower jet fuel prices and newer more efficient aircrafts," the five page report said.

"PFC Energy expects total demand growth of 18 mb/d down from 26 mb/d in 2008, with the UAE, Qatar and Iran making up the bulk of the increase," it added.

PFC energy reiterated its previous prediction that the demand for fuel oil in the Gulf will increase in 2009 as it did in 2008.

"Decreased Opec output could once again pressure the availability of associated gas and thus provide another fillip to fuel oil consumption," it said.

"A shortage of natural gas prompted a significant increase in fuel oil use in Saudi Arabia, Iran and Kuwait, while Iran's oil market regained much of the ground lost in the months following the introduction of the rationing scheme in mid-2007," the report reasoned on the increase in fuel oil demand in 2008.

PFC Energy had in a report issued a month earlier predicted that the demand for fuel oil in the Gulf would be propelled by the absence of adequate gas supplies.

The energy analysis firm expressed apprehensions of a downside risk to its forecasts if liquidity eludes the markets in the second half of 2009.

"While not achieving last year's growth rates, a substantial existing project base and key government developments will continue to underpin demand increases, which PFC Energy estimates in the range of around 70-80 mb/d for 2009. The key downside risk to this forecast could take place towards the second half of the year if sufficient liquidity to provide the necessary momentum in the industrial and property sectors does not re-enter markets," the report said.

PFC Energy attributed the rise in demand of gasoline in the Gulf partly to the number of vehicles bought in the region.

Though the trend is not expected to be the same in small GCC countries like Bahrain in the coming years.

"Strong demand growth for gasoline partly reflects heavily subsidised markets but also steep growth in consumer finance, which saw car markets boom in recent years. While PFC Energy sees a demand slowdown in the Gulf's smaller countries, the relative sizes of those markets will net insignificant changes in regional balances," it said.

The report included Iran as a part of the Arabian Gulf said: "There is little to suggest that petrol demand in Iran – the Gulf's largest market – should slow materially". PFC summed up its 2009 forecast for Iran as: "Its [Iran's] market is insulated from international prices and a large share of cars are manufactured domestically making them accessible to the middle and lower income households. In fact with oil prices now hovering around 2004 levels, energy subsidy pressures on the government should temporarily abate, potentially postponing a solution on pricing issues.

"We expect to witness strong demand to continue at 20 mb/d."