08 November 2012 14:11 [Source: ICIS news]
LONDON--Growing concerns over immediate prospects for economic growth, particularly in the eurozone, continues to stifle global oil demand, OPEC said on Thursday.
In its World Oil Outlook for 2012, the cartel revised down its forecasts for global oil demand as a result, and “foresees demand reaching 92.9m bbl/day by 2016”.
This is a downward revision of over 1m bbl/day compared to the organisation’s outlook for 2011.
With GDP for European nations in the OECD remaining “approximately flat in 2012”, OPEC predicts the impact of the eurozone crisis to continue to be felt throughout 2013, leading the cartel to assume a growth rate of 0.5% for these nations in 2013.
With demand uncertainties stemming from this crisis continuing to hinder future oil usage, OPEC anticipates oil demand from OECD nations to decline over the medium term, falling from 46.3m bbl/day in 2011 to 45.7m bbl/day in 2016.
OPEC also expects long-term oil demand prospects to be impacted by several recent developments, including the introduction of new policies, such as the International Maritime Organisation’s regulations on ships’ efficiency and marine bunkers quality specifications; higher oil prices, leading to a reduction in demand; and the implications of technological developments and implementation, especially in the transportation sector.
The cartel predicts that global oil demand will increase by over 20m bbl/day from 2010-2035, reaching 107.3m bbl/day.
This prediction of global demand is more than 2m bbl/day lower than in its previous outlook, however, the figure is buoyed by “strong upward pressures channelled through slightly higher economic growth rate assumptions for India and Russia”, OPEC said.
With OECD demand peaking in 2005 and now undergoing a steady decline over the longer term, OPEC reports that “87% of the increase in global demand is in developing Asia, where demand reaches 90% of that of the OECD by 2035”.
While the global economic recovery remains fragile, the cartel state that demand for oil hinges on future policy and technological developments.
“While oil resources are recognised as amply sufficient to satisfy future needs, shale gas and tight oil are changing future prospects in the long term,” the report said.
“The refining system needs to go through a profound rationalization and adaptation process, given the future product mix and more stringent quality specifications,” it added.
However, by 2035 OPEC predicts that fossil fuels will account for 82% of the worlds energy demand.
“Towards the end of the projection period, coal use will reach similar levels as that of oil, with oils share having fallen from 35% in 2010 to 27% by 2035,” the report said.
“Natural gas use will rise at faster rates than either coal or oil, both in percentage terms and quantities, with its share rising from 23% to 26%,” it stated.
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