20070630-IEA-Medium-Term_Oil_Market_Report_2007_82页_1mb

MEDIUM-TERM Oil Market Report Summary (July 2007)

Core Content

This report provides an analysis of the global oil market from 2007 to 2012, focusing on demand, supply, refining, biofuels, and cross-market implications. It highlights the increasing tightness of the oil market, driven by strong demand growth and constrained supply capacity, particularly from OPEC.

Main Points

Demand Outlook

• Global Oil Product Demand: Forecast to grow from 86.13 mb/d in 2007 to 95.82 mb/d in 2012, an average annual increase of 2.2% or 1.9 mb/d.
• OECD Demand: Expected to rise from 49.6 mb/d in 2007 to 52.1 mb/d in 2012, with an average annual increase of 1.0% or 0.5 mb/d.
• Non-OECD Demand: Projected to increase from 36.6 mb/d in 2007 to 43.7 mb/d in 2012, at an average annual rate of 3.6% or 1.4 mb/d.
• Regional Trends:
  • Non-OECD countries, especially in Asia and the Middle East, will see significantly faster demand growth compared to OECD.
  • Asia is expected to account for about half of the non-OECD incremental demand growth, while the Middle East accounts for almost a quarter.
  • Transportation fuels (gasoline, diesel, jet fuel) will represent the majority of demand growth, with about 67% of OECD demand growth and 60% of non-OECD demand growth attributed to these fuels.

Supply Outlook

• Non-OPEC Supply: Expected to grow by 2.6 mb/d by 2012, with an average annual growth rate of 1.0%, slightly below the previous seven-year growth rate.
• OPEC Supply: Crude oil capacity is projected to increase from 34.4 mb/d in 2007 to 38.4 mb/d in 2012, with the majority of growth coming from Saudi Arabia, UAE, and Angola.
• OPEC Spare Capacity: Expected to decline from 3.09 mb/d in 2007 to 1.55 mb/d in 2012, with the effective spare capacity remaining historically 1 mb/d below nominal capacity.
• Supply Constraints: Upstream challenges, including project delays, cost overruns, and resource nationalism, will continue to constrain supply growth. Non-OPEC supply growth is also affected by geopolitical risks and the impact of field decline rates.

Biofuels

• World Biofuels Supply: Projected to rise to 1.8 mb/d by 2012, double the 2006 level.
• Growth Drivers: Policy support and production targets, though uncertainties in feedstock prices and agricultural competition may limit growth.
• Impact on Refining: Biofuels are expected to contribute to meeting demand for gasoline and diesel, reducing the need for additional refinery capacity.

Refining and Product Supply

• Crude Distillation Capacity: Expected to increase by 10.6 mb/d from 2007 to 2012, with 9.1 mb/d of new capacity and 1.5 mb/d of capacity creep.
• Refinery Expansion: Focus on processing heavy/sour crude and upgrading fuel oil into lighter products.
• Economic Factors: Refinery economics are affected by project delays, cost inflation, and the potential for biofuels to meet demand, which could reduce the need for further expansion.

Cross-Market Implications

• Natural Gas Market: Likely to remain tight until 2012 due to supply shortfalls and infrastructure limitations, with potential upward pressure on prices.
• Fuel Oil and Gas: Fuel oil is expected to tighten, while gas may face competition from fuel oil in case of supply disruptions.
• Price Differentials: Expected to narrow as refining and biofuels capacity improves, reducing the price gap between crude and refined products.

Key Information

• Market Tightness: Despite high oil prices and some supply growth, the oil market is expected to remain tight, with OPEC spare capacity declining to minimal levels by 2012.
• Economic Growth: Global GDP growth of 4.5% annually is a key driver of demand, though risks to economic growth could reduce demand growth to 1.7% by 2012.
• Supply Risks: Project delays, cost overruns, and geopolitical issues are major risks to supply growth, with above-ground risks outweighing below-ground concerns.
• Refinery Margins: Expected to remain low due to the long lead times of major projects and potential delays.
• Biofuels and Demand: Biofuels will account for 13% of the volumetric growth in gasoline and diesel demand, potentially influencing refinery investment decisions.

Methodology and Adjustments

• Revised Forecasting: Adjusted for rising uncertainty, including the impact of field outages and project delays.
• Data Uncertainties: Particularly in non-OECD countries, may lead to upward revisions in demand growth.
• OPEC Capacity Adjustments: Effective spare capacity is historically 1 mb/d below nominal levels, affecting the overall supply outlook.

Conclusion

The report concludes that while the oil market may see some relief from increased refining and biofuels capacity, the overall trend remains towards tighter supply and higher prices. The combination of strong demand growth, constrained supply, and cross-market dynamics suggests that the oil market will remain volatile and tight over the medium term.