久草影院IEA (2020), "Oil 2020", IEA, Paris http://263rc.com/reports/oil-2020
Oil 2020 examines the key issues in demand, supply, refining and trade to 2025. This year, the report considers topics such as the impact of the new coronavirus (COVID-19) on demand; slowing supply growth in the United States and other non-OPEC countries; and the level of spare production capacity in OPEC countries to help meet demand growth. Oil 2020 looks at the interplay between the expanding US influence in global oil supply and the demand from Asia for exports from the Middle East.
久草影院 At the same time, global energy transitions are affecting the oil industry: companies must balance the investments needed to ensure sufficient supplies against the necessity of cutting emissions. In a decarbonising world, refiners face a big challenge from weaker transport fuel demand.
久草影院The outbreak of the new coronavirus (COVID-19) has added a major layer of uncertainty to the oil market outlook at the start of the forecast period covered by this report. In 2020, global oil demand is expected to contract for the first time since the global recession of 2009. The situation remains very fluid, however, making it extremely difficult to assess the full impact of the virus.
久草影院To construct a base case for oil demand in 2020, this report draws on a wide range of data sources, including initial data for transport fuel demand, the most affected sector, and recently revised global GDP estimates by the Organisation for Economic Co-operation and Development (OECD). In this base case, we assume that although the virus is brought under control in China by the end of the first quarter, the number of cases rises in many other countries. Containment measures imposed in North America, Europe and elsewhere are expected to have a smaller impact on oil demand than those in China. However, demand from the aviation sector will continue to suffer from the contraction in global air travel.
In this case, oil demand in China suffers the most in the first quarter, with a year-on-year fall of 1.8 million barrels per day (mb/d). Global demand drops by 2.5 mb/d. In the second quarter, an improving situation in China offsets deteriorating demand elsewhere. A progressive recovery takes place through the second half of 2020. For 2020 as a whole, the magnitude of the drop in the first half leads to a decline in global oil demand of around 90,000 barrels a day compared with 2019.
Ultimately, the outlook for the oil market will depend on how quickly governments move to contain the coronavirus outbreak, how successful their efforts are, and what lingering impact the global health crisis has on economic activity. At the time of publication, the high uncertainty over the course of the global epidemic has led us to propose two alternatives to our base case for demand in 2020: a more pessimistic one in which global measures are less successful in containing the virus, and an optimistic case in which it is contained quickly.
These alternatives are outlined in the March edition of the IEA’s monthly Oil Market Report, which is released in tandem with this medium-term report.
久草影院The arrival of the coronavirus is rattling a global oil market that was already facing challenges. On the demand side, growth in 2019 was significantly weaker than expected and new vehicle efficiency measures have started to weigh on transport fuels. Refining capacity additions in recent years have outstripped demand growth, bringing tough competition for an industry already challenged by tightening product specifications, most notably the new International Maritime Organisation (IMO) bunker rules introduced at the beginning of 2020.
久草影院On the supply side, geopolitics remain a wild card. Production losses from Iran, Libya and Venezuela have reached a combined 3.5 mb/d since the start of 2018. Even before the coronavirus, markets had been over-supplied, leading OPEC+ producers to cut output. Looking beyond the short term, the oil market looks comfortably supplied through 2025.
Following a contraction in 2020 and an expected sharp rebound in 2021, global oil demand growth is set to weaken as consumption of transport fuels increases more slowly. Between 2019 and 2025, global oil demand is forecast to grow at an average annual rate of just below 1 mb/d. Petrochemicals become an ever more important driver, with naphtha, liquefied petroleum gas (LPG) and ethane responsible for half of all growth. Efforts to improve the sustainability of the plastics industry will run up against the steady increase in demand from consumers in developing countries. Bans imposed on single-use plastics and recycling, even if fully implemented, will displace only a very modest amount of oil demand. Through 2025, global oil demand rises by a total of 5.7 mb/d, with China and India accounting for about half of growth.
久草影院At the same time, the world’s oil production capacity is expected to rise by 5.9 mb/d. Non-OPEC supply will rise by 4.5 mb/d while OPEC builds another 1.4 mb/d of crude and natural gas liquids capacity. This assumes that there is no change to sanctions on Iran or Venezuela. The United States leads the way as the largest source of new supply. Given its huge resource potential, it could produce even more if prices end up higher than assumed in this report. Brazil, Guyana, Iraq and the United Arab Emirates also deliver impressive gains.
Strong growth in Asian oil demand is creating major opportunities for oil producing countries that can boost exports. But growth in non-OPEC production is set to lose momentum after a few years, indicating a greater role for OPEC+ countries. The pace of expansion in the United States is slowing as independent producers cut spending and scale back drilling activity in response to pressure from investors. The deceleration in US and other non-OPEC growth from 2022 will allow OPEC producers from the Middle East to turn up the taps to help keep the oil market in balance, thereby increasing their importance for oil consuming countries.
Global attention is increasingly focused on the need to accelerate clean energy transitions in order to mitigate the risks of climate change. With its major emissions footprint, the energy sector – including the oil and gas industry – is at the heart of the matter. Demand growth for gasoline and diesel between 2019 and 2025 is set to weaken as countries around the world implement policies to improve efficiency and cut carbon dioxide (CO2) emissions, and as electric vehicles increase in popularity. Refiners, nevertheless, continue to build much more capacity than what is needed to meet product demand.
久草影院The impact of clean energy transitions on oil supply remains unclear, with many companies prioritising short-cycle projects for the coming years. To date, announcements by major oil companies on reducing their CO2 emissions have tended to focus on long‑term objectives. Nevertheless, investors continue to ratchet up pressure on the industry to sharpen its focus on sustainability issues while activists, especially in Europe and North America, seek to hinder new oil developments.
With uncertainties over demand, supply, investment strategies and business models, the global oil industry faces major challenges. While ensuring it is able to continue to meet growing demand, it must also address the need to curb emissions and improve sustainability.
Global oil demand will grow by 5.7 mb/d over the 2019-25 period at an average annual rate of 950 kb/d. This is a sharp reduction on the 1.5 mb/d annual pace seen in the past 10-year period. Following a difficult start in 2020 (-90 kb/d) due to the coronavirus, growth rebounds to 2.1 mb/d in 2021 and decelerates to 800 kb/d by 2025 as transport fuels demand growth stagnates.
Oil demand growth slows because demand for diesel and gasoline nears a plateau as new efficiency standards are applied to internal combustion engine vehicles and electric vehicles hit the market. Petrochemical feedstocks LPG/ethane and naphtha will drive around half of all oil products demand growth, helped by continued rising plastics demand and cheap natural gas liquids in North America.
Gasoline demand sees a sharp slowdown over our forecast period with growth reduced from the 2.5 mb/d seen in the previous six year period to just 500 kb/d over the 2019-25 period. Improved efficiency standards and increased penetration of electric vehicles sees demand growth stall.
久草影院Following a record increase of more than 2.2 mb/d in 2018, the pace of the US expansion slowed to 1.6 mb/d last year as independent producers cut spending and scaled back drilling activity. Further spending cuts are expected for 2020, with capital discipline remaining a priority.
久草影院In our base case, that assumes $60/bbl Brent, growth is expected to grind to a halt in the early 2020s and production will plateau around 20 mb/d – 2.5 mb/d higher than in 2019.
Due to its fast ramp-up and rapid decline, US light tight oil (LTO) production is more responsive to a change in the oil price than conventional sources of supply. Recent price volatility could have a major impact on US production. A price of $40/bbl would cause LTO output to decline from 2021, and fall by 1.1 mb/d to 2025, compared with growth of 2.2 mb/d in our base case.
Global oil supply looks comfortable through the forecast period. The world’s oil production capacity is expected to rise by 5.9 mb/d by 2025, which more than covers growth in demand.
The US leads the way as the largest source of new supply. Brazil, Guyana, Iraq and the UAE also deliver impressive gains. Colombia, the UK, Russia, Egypt, Nigeria and Angola post the biggest declines. Total non-OPEC oil supply rises by 4.5 mb/d to reach 69.5 mb/d by 2025. As for OPEC, even though sanctions and economic distress have wiped out 2.5 mb/d of production from Iran and Venezuela since 2017, effective crude oil capacity rises by 1.2 mb/d to 34.1 mb/d.
Gains in supply are heavily front-loaded, however, and robust non-OPEC growth through 2021 suggests that there is likely to be a role for OPEC+ market management during the first part of the period. From 2022, the US loses steam allowing OPEC producers from the Middle East to turn up the taps to help keep the oil market in balance.
In 2019 the US Gulf Coast became the largest seaborne crude oil export hub outside the Middle East, supplying 2.6 mb/d to world markets. It overtook Black Sea ports sending out Russian and Caspian crude, and Nigeria. During the medium-term, the US Gulf Coast will solidify its position as the largest seaborne export hub outside the Middle East, adding another 2 mb/d to seaborne crude oil exports. Other non-OPEC producers, Brazil, Guyana, Canada, increase exports too. As US growth plateaus, Middle East producers step up to supply the required incremental barrels.
久草影院Current oversupply and the impact of COVID-19 on demand should not be a reason for complacency when it comes to security of supply.
Global oil demand rebounds in 2021 and Asia accounts for 77% of oil demand growth through 2025. At the same time, oil production in the region declines. As a consequence, Asian oil import requirements in 2025 surpass 31 mb/d. All major Asian economies are heavily dependent on oil imports.
Oil imports will be coming from places further away, increasing voyage duration and inherently limiting flexibility when dealing with emergencies. Asian countries will need to work individually and collectively to enhance oil supply security.