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Oil 2021 – Analysis and forecast to 2026
IEEJ Global Energy Webinar, 19 March 2021
Toril Bosoni

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Crude prices surge to $70/bbl on tightening market, OPEC+ deal$/bbl
70

Crude Futures Month 1 vs Month 36
Source: ICE, NYMEXmbOECD Total Industry Stocks

3300

60

3200

503100

40

3000

30

2900

2028001027000
Jan 202600

May 20WTI M1
Brent M1

Sep 20Jan 21
May 21WTI M36
Brent M36

2500
Jan-14Jul-15Jan-17

Jul-18Jan-20

Crude futures have recovered to nearly $70/bbl.
OECD stocks continue to fall as OPEC+ market management tightens market.
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OPEC+ cut extension keeps market finely balanced in 2Q21
Demand/Supply Balance

mb/d
110

mb/d
12.0

100

8.0

90

4.0

80

0.0

70

1Q20

2Q20

3Q20

Stock Ch. & Misc (RHS)

4Q20

1Q21

2Q21

Demand3Q21

4Q21

-4.0

Supply** Assumes 100% compliance with OPEC+ deal

Expected demand recovery in 2H21 leaves room for higher than scheduled output boost.
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OIL 2021

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Global oil demand shifts lower after historic collapse

mb/d

Global oil demand
110Pre-pandemic
forecast

105

100

95
OIL 2021
Base Case90

85

80
2010

2012

2014

2016

2018

2020

2022

2024

2026

But in the absence of stronger policy and behavioural changes, demand is set to rise every year through 2026.
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Oil demand now on track to grow by 13 mb/d by 2026 from 2020 low
Global oil demand growth by region

Non-OECD Asia
2020-2026

OECD2019-2026

Rest of the World-4-20246810

1214mb/dCompared with 2019 levels, demand will be 4.4 mb/d higher. Non-OECD Asia dominates growth.
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Petrochemical feedstocks drive demand growth, gasoline to fallmb/dAnnual oil demand change (y-o-y)Annual oil demand change vs 2019866442200-2-2-4-4-6-6-8-8-10- 10
2019 2020 2021 2022 2023 2024 2025 2026

LPG/ethane

NaphthaGasoline

Jet/kerosene

2020 2021 2022 2023 2024 2025 2026
Gasoil/diesel

Residual fuelOther products

LPG and ethane, naphtha recover to 2019 levels by 2021; gasoil by 2022; Jet/kerosene by 2024.
Global gasoline demand in not expected to return to 2019 levels.
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Industry cuts spending on uncertain outlook
Global oil and gas capital spending

Following a 30% decline in 2020, upstream spending plans for 2021 show little change.
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Oil capacity building slows, hefty spare cushion helps cover demandmb/dDemand and supply changes, 2020-2026
142020 supplysurplus

1210OPEC+
86

Other nonOPEC+

42US
0
Oil demand growth

Supply growth

Production capacity rises 5 mb/d by 2026. Ample spare capacity, mostly in Middle East, keeps market comfortable.
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Middle East dominates global oil supply increase

mb/dWorld oil supply change 2019-2026
0.71050.6
1.2

-0.6
-5.3

100

0.7

0.7

0.6

1.3
1.3

1.5

104.2

1.6
95

-0.7
100.5
93.9

2026

OthersGuyanaKuwaitRussiaCanadaBrazil

Iraq

UAE

Saudi

US2020

OthersOPEC+

US201990

Supply to rise 10 mb/d by 2026 to meet demand rebound. Key Gulf producers account for nearly half the increase.
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Modest US growth expected as investment strategy shifts
US oil supply

Lofty growth levels unlikely to be repeated.
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OPEC spare capacity looks comfortable through medium-term

mb/d

Spare production capacity
1098

OPEC+partners

7
6
Removedfrom market
due to Iransanctions

5
4
3

OPEC
effective
sparecapacity

2
10

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

An additional 1.7 mb/d of crude supply could be brought to market if sanctions on Iran ease.
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mb/d

Iran awaits market return; sanctions shut in 1.7 mb/d of crude supply
4.5

Crude oil production in Iran, 1986-2026
IranIraq
WarSanctions

4.0

3.5

3.0

2.5

2.0

1.5
1986

1991

1996

2001
Crude oil production

2006

2011

2016

2021

2026

Capacity

Production could return in short order, if/when sanctions ease.
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mb/d

Great downstream migration continues
9Refinery capacity changes 2020-2026

87

65
432
10
New sites
North America

Expansions

Middle East

Shutdowns Net additions

China

Other AsiaEurope

OtherEast of Suez accounts for 90% of net capacity additions by 2026
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Sharp decline in oil demand growth and call on refineries
Demand and refinery capacity changes

mb/d

2012-20192019-2026

101099887766554433221

100

Total oil demand

Refined product demand

Gross capacity additions

Net capacity additions

Oil demand growth forecast is half of recent levels, while net capacity additions are stable.
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Covid-19 speeds up third round of global refinery closures
Global average refinery capacity utilisation rates
85%

Closures of 12 mb/d80%

Closures of 7 mb/d

Required: 6 mb/d75%

Announced: 3.5 mb/d70%

65%

60%
1971

1981

1991

2001

2011

2021

Capacity of 6 mb/d must close to push global refinery utilisation rates back above 80%
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East of Suez drives increase in global refining throughput

mb/d

Refinery throughputs
6050

4030
20
100
1971

1981

1991

Atlantic Basin

2001

2011

2021

East of Suez

Atlantic Basin refinery throughputs do not recover to 2019 levels
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Asian crude oil imports reach 27 mb/d

35mb/dmb/dAtlantic Basin and East of Suez crude oil fundamentals

3055

50

25452040
1535

1053002012 2014 2016 2018 2020 2022 2024 2026

252012 2014 2016 2018 2020 2022 2024 2026

Asian crude oil import requirement

Middle East crude exports

Atlantic Basin refining

Atlantic Basin crude output

Average net oil import dependence reaches 82% in 2026, up from 77% in 2019
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The centre of gravity for products trade shifts to Asia
Net refined product imports, 2026 vs 2019
mb/d0.0-0.5-1.0
20192026-1.5-2.0-2.5

Latin America

AfricaEuropeAsia 4**Australia, Indonesia, New Zealand and Singapore combined net product imports reach 2.4 mb/d
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Contact: report@tky.ieej.or.jp
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