CERAWeek ’17: IEA expects global oil demand to rise, outpace supply after 2020
HOUSTON -- Global oil demand will continue to rise in the next five years, dominated by India and Asia, the International Energy Agency said Monday, March 6, during the first day of CERAWeek by IHS Markit in Houston.
Dr. Fatih Birol, IEA executive director, presented the agency’s five-year oil market forecast, where he said global oil supply will struggle to keep pace with demand after 2020, unless new projects are announced.
“We are expecting a continuation of the oil demand growth globally,” Birol said. “You don’t see a peak oil demand, but the pace of the demand is slowing down. We expect global oil demand to hit 100 MMbpd by 2019. And the growth of oil demand is coming from China and India.”
China and India are responsible for more than half of the oil demand growth, the report shows. The important drivers of the growth include transportation becoming more prevalent in developing countries and petrochemical demand. The pace of petrochemical demand growth is higher than transportation.
Asia alone consumes seven out of every 10 extra barrels consumed globally. As the demand of oil in Asia grows, crude exports from the Middle East will not be able to keep up with demand.
“Asia will need to look beyond the Middle East to meet its growing import requirements,” Birol said. “Exports from Brazil and Canada will be higher than those from the Middle East, which means the trade routes will shift somehow.”
India’s oil demand will outpace China’s by 2020, the report said, because IEA sees plenty of growth to come from the country. Currently, Indian per capita oil consumption is 1.2, while China sees 3 barrels per capita per year.
“India is taking over China as the center for oil demand growth,” Birol said.
The main worry of the report, Birol said, is on the supply side and how they plan to keep up with the demand beyond 2020. Aside from the supply demand from Brazil and Canada, the US will be the leader in supply growth, with IEA expecting US light tight oil production to make a strong comeback, growing by 1.4 MMbpd by 2022, if prices remain around $60/barrel.
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