The combination of buoyant oil prices and high production levels will continue to be broadly positive for the economies of the six-member Gulf Cooperation Council, Bourland said. Unrest in Libya has also provided a temporary fillip to producers such as Saudi Arabia, which has ramped up production to fill the dearth in Libyan oil supply. The Kingdom was pumping in excess of 9 million barrels a day at the end of September. Jadwa has a 30 per cent shareholding in Saudi Aramco Lubricating Oil Refining Company (Luberef), a refiner and marketer of base oils that is a joint venture with Saudi Aramco.

However, countries at the epicenter of the so called Arab Spring are experiencing a drag on their economies as they continue to maintain stability, with Egypt, Tunisia and Bahrain seeing the biggest reductions in growth in 2011. With the exception of Bahrain, GCC economies have witnessed limited protests but governments are spending heavily to placate discontent with potentially dramatic escalation in government budgets. As recently as 2004, Saudi Arabia required a break-even oil price of just $24 per barrel to balance its budget. That figure is expected to mushroom over $80 per barrel next year as a result of massive government expenditure, which will top $200 billion this year, said Bourland, who forecasts oil prices in 2012 of $95/barrel for Brent and $82/barrel for WTI.

The United Arab Emirates, a major lubricant market and export hub in the GCC, will require a break-even price around $85 per barrel, although Kuwait and Qatar need a lower break-even price (as a result of smaller levels of government spending) requiring a price of only $58 per barrel and $50 per barrel. For now, Saudi Arabia, the world’s largest oil exporter, can afford to indulge in economic largesse with low levels of government debt and foreign reserves at more than100 per cent of the Kingdom’s mammoth $540 billion GDP.

Similarly, Kuwait’s foreign reserves as a percentage of GDP are currently running close to 300 per cent, noted Bourland. Nevertheless, despite high oil revenues, some GCC countries have a large debt burden, with Qatar and the UAE the most significant at 75 per cent and 64 per cent of GDP in 2011, respectively, compared with 10 per cent in Saudi Arabia. Forecast GDP is $163 billion for Qatar and $268 billion in the UAE. Qatar’s per capita GDP is set to reach a staggering $92,910 this year, the highest in the world. At the other end of the Middle East spectrum, Bahrains per capita GDP is expected to be $18,210.

Bourland said the regions fundamentals continue to offer solid opportunities for base oil producers, a fact underlined in recent announcements by Neste and Luberef to bolster or initiate new base oil production. Besides strong GDP growth among the major Middle Eastern oil exporters, strong population growth, inexpensive fuel, and a vibrant market for automobile sales, the environment is in place for continued steady growth in lubricant sales for many years to come.