IEEJ：June 2018 © IEEJ2018

Oil Market: Short & Medium Term Perspectives

IEEJ – 14 June 2018

Keisuke SADAMORI, Director, Energy Markets and Security, IEAIEEJ：June 2018 © IEEJ2018

Robust global oil demand growth to 2023
World oil demand growth (y-o-y change)

mb/d
1.8

Rest ofthe world

1.6
1.4
1.2

India

1.0
0.8
0.6
0.4

China

0.2
0.0
2017

2018

2019

2020

2021

2022

2023

China and India account for almost half of world oil demand growth© IEA 2018

1IEEJ：June 2018 © IEEJ2018

Petrochemicals drive global oil demand growth to 2023

Feedstock requirements for new steam crackers
kb/d
700
600500Naphtha400300Ethane200
1000US

China

RussiaOthersPetrochemical feedstocks (ethane and naphtha) responsible for 25% of global oil demand growth© IEA 20182IEEJ：June 2018 © IEEJ2018

Booming non-OPEC supply growth reshapes world oil market…
Changes in global oil supply capacity 2017-2023

4.0mb/d

3.0
2.0
1.0
0.0
Venezuela

AngolaMexicoChina

Indonesia

Colombia

NorwayIranIraq

CanadaBrazil

US-1.0…more than covers demand growth for next three years. By 2023, non-OPEC supply grows by 5.2 mb/d.
OPEC oil capacity rises only 1.2 mb/d due to Venezuelan collapse and limited increases elsewhere.
© IEA 2018

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IEEJ：June 2018 © IEEJ2018

Higher oil prices unleash second wave of US supply

18
16
14
12
10
8
6
4
20mb/dLTO
Gulf ofMexico
NGLs
AlaskaOther2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Total output reaches 17 mb/d by 2023 – and could be even higher if prices rise.
© IEA 2018

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IEEJ：June 2018 © IEEJ2018

China net crude oil imports double the US in 2023
Net crude oil imports

mb/d10US

8
China
6India

420
2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

Indian imports, too, surpass the US in 2023 as shale growth reduces US import dependence.
© IEA 2018

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IEEJ：June 2018 © IEEJ2018

Oil industry needs to replace one North Sea each year
Output loss from post-peak conventional crude oil fields
mb/d
0.0
-1.0

OPEC

-2.0
Non-OPEC

-3.0
-4.0
-5.0
2010

2011

2012

2013

2014

2015

2016

2017

Ageing oil fields lose more than 3 mb/d per year despite slowing decline rates.
© IEA 2018

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IEEJ：June 2018 © IEEJ2018OECD stocks now well below 5-year average
mb400

OECD Stocks vs 5-Year Average

300
200
1000-100
Jan 16Oil Products

Jan 17Jan 18

Crude + NGL + Feedstocks

At end-April, OECD stocks were 27 mb below the five-year average. Crude & products stocks both
below the target. Middle distillate stocks are tight.
© IEA 20187

IEEJ：June 2018 © IEEJ2018

Market tightens in 2018 and slightly looser in 2019mb/dDemand/Supply Balance until 4Q19 mb/d102

3.01002.098

1.0

960.0

94
92

-1.0

90

-2.0
4Q15

4Q16

4Q17

Total Stock Ch. & Misc (RHS)

4Q18
Demand4Q19
Supply**Note: For scenario purposes, OPEC/non‐OPEC cuts remain constant.

Risks include: Venezuela and Iran supply falls; weaker oil demand on trade slowdown© IEA 20188

IEEJ：June 2018 © IEEJ2018

Conclusions• Robust world oil demand growth to 2023 – petrochemicals key driver.
• Non-OPEC output growth exceeds demand increase through 2020.
• US, Brazil, Canada, Norway dominate growth. New infrastructure investments
relieve US export bottlenecks.
• US crude finds new markets as refiners seek light, low-sulphur crude to meet
petrochemical demand and IMO specifications.
• More upstream investment needed today to meet future demand and offset
3 mb/d of declines from mature oil fields each year.
• Stocks now below 5-year average and distillates are tight.
• If OPEC supply stable, stocks draw 0.2 mb/d in 2H18 and build by same in
2019.
• Venezuela & Iran are major supply risks. Vienna Agreement countries likely to
be called on for more supply.
• As spare capacity cushion shrinks, supply security concerns remain critical.
© IEA 20189

IEEJ：June 2018 © IEEJ2018© IEA 2018

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