OPEC said world oil consumption will reach 100 million barrels per day (bpd) later in 2018. This milestone level will be reached sooner than previously forecast.
Mohammad Barkindo told an energy conference in South Africa’s Cape Town that a stable environment was needed to encourage oil industry investment to meet the rising demand.
Barkindo said oil industry confidence was returning and OPEC was exploring ways of institutionalizing cooperation between OPEC and its non-OPEC allies on their production levels.
The International Energy Agency raised its estimate of world oil demand growth in 2019 to 1.5 million b/d from 1.4 million b/d, anticipating the impact of price rises will peter out, and highlighted robust non-OPEC oil output growth.
IEA raised its estimate for growth in non-OPEC oil output next year to 1.9 million b/d, from 1.8 million b/d in its previous report. Growth will be led by the US, with a 1.25 million b/d increase, Brazil with an extra 350,000 b/d, and Canada and Russia each increasing output by 210,000 b/d.
China, India and the developing world remain the big growth drivers. The rest of the world’s economy is firing on all cylinders again, pulling harder on the world’s oil fields.
There are more commonalities with past up-cycles. Oil inventories and spare productive capacity are relatively thin. Upstream investment is lagging downstream consumption growth.
Ten to 15 years ago, substitutes for oil were far from viable. Today, electric vehicles are emerging; yet despite a growing adoption trend, wheels being turned by batteries won’t be displacing meaningful oil barrels any time soon. So, the lack of substitutes is another recurring theme.
Oil consumers have crossed the psychological 100-million-barrel-a-day marker. At a notional US$60/B, that’s a US$2.2 trillion per year business. So, going forward, the trillion-dollar questions are: How will consumption be supported from below ground, and at what price? Because it really is different this time.