• 4 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 7 minutes Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 13 minutes NordStream2
  • 8 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 6 hours California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 8 hours "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 3 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 3 days "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 22 hours U.S. : Employers Can Buy Retirement Security for $2.64 an Hour
  • 1 day Nord Stream - US/German consultations
  • 3 days An Indian Opinion on What is Going on in China
  • 3 days Can Technology Keep Coal Plants Alive and Well?
  • 5 days Succession Planning in Human Resources for Vaccinated Individuals in the Oil & Gas Industry
  • 11 hours Forecasts for Natural Gas
  • 20 hours Australia sues Neoen for lack of power from its Tesla battery
  • 3 days Storage of gas cylinders
  • 4 days Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
Why $80 Oil Won't Destroy Demand

Why $80 Oil Won't Destroy Demand

Global oil demand is recovering…

Dave Summers

Dave Summers

David (Dave) Summers is a Curators' Professor Emeritus of Mining Engineering at Missouri University of Science and Technology (he retired in 2010). He directed the…

More Info

Premium Content

OPEC's View of the World Oil Market

It is interesting to read the viewpoint of OPEC each month, as it relates to global oil supply, and the numbers that they rely on to estimate how much production that will be required.  For 2012, for example, they now see no need to increase production above 30 mbd, (though it averaged 31.62 mbd in April, when NGL and non-conventional sources are included) with adequate production growth to meet demand (some 0.6 mbd) coming from non-OPEC sources that are anticipated to average 53 mbd this year. At present supply is seen as exceeding demand, hence there has been an increase in global stocks which OPEC has noted. 

World Oil Demand Growth
Figure 1. Quarterly world oil demand growth (OPEC May MOMR)

The forecast by region is broken down, as follows:

 
OPEC Regional consumption forecast for 2012
Figure 2. OPEC Regional consumption forecast for 2012 (OPEC MOMR )

However, while there appears to be relative stability in the market, this conceals the changes in internal consumption within the Middle East, that collectively effectively reduce the quantity of fuel that is available to the rest of the world, if their production overall remains flat.

Quarterly demand growth in the Middle East
Figure 3.  y-o-y changes (OPEC MOMR)

When sources for supply are examined, OPEC sees that the majority of the increase in supply will come from increases in North America. A further increase in production of some 0.66 mbd is anticipated over the production in 2011.

Anticipated non-OPEC Production
Figure 4. Anticipated non-OPEC production in 2012 (mbd) (OPEC MOMR)

Which, of course, brings up the question of the overall production numbers for OPEC. It is interesting to note that OPEC see that in April Iraq finally surpassed a production of 3 mbd, with a projected target of 6 mbd by 2016, and 10 mbd by 2018. (Iraq has not yet reached the 3.5 mbd levels that it achieved before all the conflict in the region, but hopes to soon surpass the 3.2 mbd that Iran is currently producing.)

Information from secondary sources.
Figure 5.  (OPEC MOMR) Information from secondary sources.

Of course, the increasing impact of sanctions on Iran, which is reported to have already cut exports from 2.2 mbd down to 1.7 mbd, contributes to the current drop in Iranian production. Whether those sanctions will toughen or lead to a resolution of the crisis is still one of those hanging questions . . . . Interestingly OPEC puts up two versions of the table shown in Figure 5, that above, which comes from secondary sources, and a second version that is generated from direct communication. The numbers for Iran and Iraq are notably different.

OPEC production through April 2012
Figure 6. OPEC production through April 2012 (OPEC MOMR) Information from direct communication.

Tehran, which provided the information for the latter table, is also now citing it in their press together with claims that they will be able to increase production by 1.5 mbd by 2016. Hmm! Well we will look at Iranian production after finishing the review of Saudi Arabia. Looking at all liquids, OPEC sees the world supply holding relatively steady, while OPEC has been steadily increasing production, a slightly different message from that of the summary at the top of the document.


Figure 7. Contributions of OPEC countries to overall global oil supply (OPEC MOMR)

 The impact of the oil sanctions on Iran can be expected to bite with increasing strength over the next two months, and it will be interesting to see how the market responds. There is evidence, cited earlier, that there has been some pre-positioning of additional supplies around the globe to help with offsetting the loss of the Iranian oil, and with the potential to release national reserves to alleviate problems. These are interesting numbers to watch, and so I will continue to monitor them in the months ahead. The decline in overall demand for OPEC oil, which the report sees can be anticipated to be due, in large measure to the increase in production from North America. How accurate that prediction will be over the year is an interesting topic for study.

OPEC view of the crude oil balance between supply and demand for 2012
Figure 8. OPEC view of the crude oil balance between supply and demand for 2012 (OPEC MOMR )

By. Dave Summers

David (Dave) Summers is a Curators' Professor Emeritus of Mining Engineering at Missouri University of Science and Technology (he retired in 2010). He directed the Rock Mechanics and Explosives Research Centre at MO S&T off and on from 1976 to 2008, leading research teams that developed new mining and extraction technologies, mainly developing the use of high-pressure waterjets into a broad range of industrial uses. While one of the founders of The Oil Drum, back in 2005, he now also writes separately at Bit Tooth Energy.


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News