Global Oil Demand – Up, Up and Away!

Contributed by Robert Lyman © 2017

Robert Lyman is an Ottawa energy policy consultant and former public servant of 27 years, prior to that he was a diplomat for 10 years.

With all of the claims by activists in Canada and elsewhere that the world is “getting off oil”, it is informative and refreshing to examine the actual data on world oil consumption as published by the most authoritative sources available.

There are three organizations that are highly respected for their expertise in world oil supply and demand conditions and trends, the International Energy Agency (IEA), the United States Energy Information Administration (EIA) and the Secretariat of the Organization of Petroleum Exporting Countries (OPEC). Of the three, the only one that publishes free detailed analysis and predictions for the short-term in the EIA.

Here is an EIA chart that shows world liquid fuels (oil and natural gas liquids) consumption from 2007 to 2016, with projections for 2017 and 2018.

To summarize, world liquids consumption declined from about 87 million barrels per day in 2007 to about 85 million barrels per day during the recessionary year of 2008, and since then rose to 97 million barrels per day in 2016. The EIA projects liquids consumption to continue growing to 101 million barrels per day by the end of 2018. Since 2008, the growth in liquids consumption has averaged about 1.2 million barrels per day, but it has accelerated recently.

The International Energy Agency, in its most recent Oil Market Report, gives the same figure for world oil consumption as the EIA does for all liquids (i.e. 97 million barrels per day). Its forecast for oil demand growth is 1.5 million barrels per day in 2017 and 1.3 million barrels per day in 2018.

The OPEC Secretariat, in its November 2017 forecast, quotes oil demand as 98.45 million barrels per day in 2017 and projects it to rise by 1.5 million barrels per day in 2018.

The various source differ somewhat on what will happen in terms of oil supply, as there are many factors in play. The most important of these are the general pace of world economic growth, the extent to which the OPEC countries will maintain market “discipline”, as represented by their current withholding of about 1.8 million barrels per day in production, and the ever-present risk of supply disruptions, the most important of which may be the risk of economic collapse in Venezuela. The consensus among the government-related forecasters is that oil production will not quite match demand, with a gradual decline in oil stocks, and slightly higher prices over the next year.

The International Monetary Fund, in its most recent report on the world economy, foresees continuing improvement in about 75% of the countries, leading to higher employment, expanded manufacturing and trade. Based on this, some private sector investment analysts who follow oil markets are projecting that world oil demand will increase to almost 102 million barrels per day by the end of 2018, moving oil prices substantially higher.

If the EIA and private sector projections hold true, by the end of 2018 world oil consumption will have grown over 16 million barrels per day since 2008, almost a 20% increase – a reality activists have failed to grasp.

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