Global demand for oil depends largely on the world economic situation. Business activity has flourished In recent years. However, whereas in 2004 demand for oil still grew by 3.9 %, statistics from the International Energy Agency IEA show oil consumption in 2005 und 2006 up by only 1.6 % and 1.0 % respectively. That said, energy consumption trends differ between the industrial countries and the emerging markets. The industrial countries consume by far the largest chunk of global oil production, around 60 %, but their energy intensity is declining. Added to this is a much higher oil price level. Price increases in recent years have encouraged energy-saving behavior and more widespread use of the relevant technologies.
Medium-term trends on the oil market
World economic expansion in 2007 will fall slightly short of last year, although remaining robust. On balance we will probably see global oil consumption climb by around 1.4 % to almost 86 mb/d. What is now important is how oil output can keep pace with this, particularly since most “black gold” comes from comparatively volatile parts of the world, giving rise to certain imponderables in energy supply.
This year the cuts announced by OPEC will therefore probably be implemented only half-heartedly. Outside OPEC oil output will rise by an estimated 1.2 mb/d. Growth will come mainly from the Caspian Sea, West Africa, the US and biofuels. In this base scenario supply is estimated at around 86 mb/d, meaning it would be adequate. The ample supply situation is further underpinned by high industrial stocks in the OECD countries. Industry stockpiles in the OECD are well above the average for the last five years.
In this market environment the oil price is likely to average USD 55 a barrel in 2007. In the medium term the large investment projects will boost production capacity. Moreover, the search for alternative energy sources will receive fresh momentum. However, oil consumption will also pick up more strongly again. The biggest push to demand will stem from the emerging markets, especially China. However, the expansion in supply will suffice to cover the extra demand. An oil price crisis is not on the cards. Rather, we will again see phases where the oil price can ease substantially.