The Gulf Co-operation Council (GCC), along with Iran, remains one of the last regions in the world where demand for refined oil will grow in 2009.

Demand for refined products in the region is expected to increase by 205,000 barrels per day this year, even as global demand contracts substantially, a study said.

Seconding the study, analysts said even globally, 2009 may not be as bad a year for energy sector as was earlier forecast. "With signs of economic recovery emerging, the drop in demand in the OECD countries may not be as severe as earlier forecasted by the International Energy Agency (IEA) or the Energy Information Administration of the United States," said Richard Savage, head of energy research at London-based Mirabaud Securities.

Washington-based PFC Energy said that though demand will rise for most refined products, fuel oil demand will register the highest growth.

"Supported by generous prices, subsidies, a sizeable existing project base and hefty fiscal government spending, the economies of the Gulf Co-operation Council and Iran will set the global pace for oil consumption in 2009 as one of the remaining regions of positive and robust oil demand growth, projected at 205 mb/d (205,000 barrels a day)," PFC Energy said in its report.

Even as the global financial crisis began to have an impact on the Gulf's economic ambitions this year, oil demand has not been affected as severely as other regions, PFC Energy said.

"Having attracted large multinationals and nurtured a dynamic private sector, these commodity-exporting states have created a robust economic base that should continue to drive consumption of transport fuels and fuel oil, which is critical to power generation."

The product that will provide the largest demand upswing this year is fuel oil.

The energy analysis agency said demand for fuel oil may even grow at pace higher than last year.

Fuel oil will continue to be used for generation of power in the region, unless gas, which was originally meant for petrochemical plants, is directed to power plants, PFC Energy said.

Winter heating requirement in Iran coupled with the summer air conditioning demand of the GCC will contribute to fuel oil demand in the region, PFC Energy said.

"As a result we forecast regional demand growth of 40 mb/d (40,000 b/d) with significant upside potential to be determined in the second and third quarter."

While demand for diesel will grow by 69,000 b/d this year, that of jet fuel will grow by 15,000 b/d and that of gasoline will grow by 26,000 b/d this year (all figures for GCC), PFC Energy said.

Public sector spending on industries, regional airlines defying weaker economic conditions and an infatuation for gas-guzzling vehicles in the region will ensure a rise in demand for fuels.

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