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OPEC Braces For Drastic Drop In Oil Demand

November 6, 2019

OPEC Braces For Drastic Drop In Oil Demand

OPEC Climate Demand

OPEC admitted that demand for its oil over the next few years could be drastically weaker than it previously thought, due to a combination of a weakening economy, rising supply elsewhere, and pressure from climate activists.

In its World Oil Outlook, OPEC said that demand for its oil may only reach 32.8 million barrels per day (mb/d) by 2024, a figure that is substantially lower than the 35 mb/d from last year’s estimate. Demand is still expected to grow in non-OECD countries going forward, but OPEC admitted that demand may peak in the OECD in 2020.

Slower economic growth also factored into the lower medium- and long-term estimates. “Given recent signs of stress in the global economy, and the outlook for global growth, at least in the short- and medium-term, the outlook for global oil demand has been lowered slightly this year to 110.6 mb/d by 2040,” OPEC’s Secretary-General Mohammad Barkindo said in the report.

OPEC said that non-OPEC production continues to rise, particularly from U.S. shale, although not exclusively. The cartel has had to restrain production for several years to keep prices from crashing, even in the face of relentless shale growth. U.S. shale is growing, but is now slowing dramatically. At the same time, countries such as Norway, Brazil, Canada and Guyana are expected to continue to add supplies in the next few years. Steady supply increases puts OPEC in a bind.

Meanwhile, the attention paid to the risks of demand destruction in the OPEC report is notable. The phrase “climate change” appears nearly 50 times in the report and the cartel acknowledged that electric vehicles are “gaining momentum.”

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OPEC’s 2015 World Oil Outlook

December 25, 2015

OPEC’s 2015 World Oil Outlook

The OPEC 2015 World Oil Outlook came out a few days ago. They basically produce two outlooks, a medium term outlook to 2020 and a long term outlook to 2040. I found their medium term outlook pessimistic in some cases to optimistic in others. But I found their long term outlook to be wildly optimistic… in most cases.

In all cases below I chart crude when it is available and “liquids” only when no other option is available. The data is in million barrels per day.

OPEC Med. Term Outlook

Here is their medium term outlook chart. Notice they expect both OPEC and Non-OPEC crude to decline in 2016 but Non-OPEC crude starts a slow recovery in 2017. They say OPEC crude will not start their recovery until 2019.

OPEC Long Term Outlook

Here is their long term outlook. Notice the tremendous growth in “Other Liquids”, whatever that is.

OPEC Outlook Non-OPEC Crude

OPEC expects Non-OPEC crude to be down in 2016 but to begin a slow recovery in 2017. I think that outlook is way too optimistic.

OPEC Outlook OPEC

OPEC thinks their short term production has peaked and will decline by 100,000 barrels per day next year and hold on a flat plateau until sometime after 2010.

OPEC Outlook World Crude

Adding OPEC and Non-OPEC crude we see that OPEC thinks World crude production will decline next year but begin a slow increase starting in 2017. Also notice that OPEC’s estimate of current crude production is well below what the EIA says is being produced and even below JODI’s production numbers. I think this is because OPEC does not count Condensate. Other than that I do not have an explanation.

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