OIL 2O17 Analysis and Forecasts to 2O22 2017 Market Report Series OECD/IEA, © OIL 2O17 Analysis and Forecasts to 2O22 Check out the new and improved Oil Market Report website! The IEA has redesigned and improved its online Oil Market Report (OMR), making it easier for subscribers and non-subscribers to get important information from the site. The OMR site — https://www.iea.org/oilmarketreport/ — now offers more powerful search options and a fully indexed archive of reports going back to 1990. The improved OMR also features interactive graphics as part of each monthly issue. First published in 1983, the OMR provides the IEA view of the state of the international oil market, with projections for oil supply and demand 6 to 18 months ahead. For more information2017 on subscribing to the OMR, please visit https://www.iea.org/oilmarketreport/subscription/. Market Report Series OECD/IEA, © INTERNATIONAL ENERGY AGENCY The International Energy Agency (IEA), an autonomous agency, was established in November 1974. Its primary mandate was – and is – two-fold: to promote energy security amongst its member countries through collective response to physical disruptions in oil supply, and provide authoritative research and analysis on ways to ensure reliable, affordable and clean energy for its 29 member countries and beyond. The IEA carries out a comprehensive programme of energy co-operation among its member countries, each of which is obliged to hold oil stocks equivalent to 90 days of its net imports. The Agency’s aims include the following objectives: n Secure member countries’ access to reliable and ample supplies of all forms of energy; in particular, through maintaining effective emergency response capabilities in case of oil supply disruptions. n Promote sustainable energy policies that spur economic growth and environmental protection in a global context – particularly in terms of reducing greenhouse-gas emissions that contribute to climate change. n Improve transparency of international markets through collection and analysis of energy data. n Support global collaboration on energy technology to secure future energy supplies and mitigate their environmental impact, including through improved energy efficiency and development and deployment of low-carbon technologies. n Find solutions to global energy challenges through engagement and dialogue with non-member countries, industry, international organisations and other stakeholders. IEA member countries: Australia Austria Belgium Canada Czech Republic Denmark Estonia Finland France Germany Secure Greece Sustainable Hungary Together Ireland Italy Japan Korea Luxembourg Netherlands New Zealand Norway Poland Portugal Slovak Republic © OECD/IEA, 2017 Spain International Energy Agency Sweden Website: www.iea.org Switzerland Turkey United Kingdom Please note that this publication United States is subject to specific restrictions that limit its use and distribution. The European Commission The terms and conditions are also participates in available online at www.iea.org/t&c/ the work of the IEA. FOREWORD FOREWORD We present the findings of this year’s report, which we have renamed the Market Report Series: Oil 2017 (formerly the Medium-Term Oil Market Report), in a very different market context than we saw a year ago, when surging OPEC production levels and stocks climbing ever upward contributed to prices falling to around USD 30 per barrel. Indeed today, the oil market is dramatically different as we return to formal market management by OPEC and leading non-OPEC producers and prices appear to have stabilised close to USD 55/bbl. This change is a reminder not only of the continued central importance of oil in global energy markets, but also why the IEA’s continued emphasis on secure energy supplies remains so essential. While the output reduction agreement takes shape, there is a broad debate on how quickly stocks will draw and when the market will rebalance. Another uncertainty is to what degree US light tight oil (LTO) and production from other non-OPEC countries will come bounding back, driven by higher oil prices and reduced production costs. Output levels are already edging up and look poised to rise over the course of this year. And the potential for new policies in the US that support further development have already boosted optimism in the oil patch there, though it will take some time for this to translate into new barrels. While the US oil industry is seeing a revival, the dramatic declines in global oil industry investment over the last two years, and only modest signs of recovery in 2017, mean that it is far from clear that enough projects will enter the pipeline in the next few years to avoid a potentially tight market by 2020 and with it, the possibility of a price spike. On the demand side, we see less uncertainty: growth will continue, driven mainly by Asia. India overtakes China as the main driver of demand growth, as was foreseen by the IEA some time ago. And while there has been much discussion and debate about a peak in oil demand, we see no such peak in sight. Thus, we will need to see more upstream oil investment and we will need to see it soon. Given the many uncertainties on the production side and the expectation of sustained demand growth, many are predicting greater volatility in the oil market which generally has negative consequences for both consumers and producers. It is my hope that this report will provide clear insights on the next five years in the international oil market and that it will provide a constructive contribution to the debate. And in the meantime, the IEA will continue to watch the market, monitor developments and call for adequate investment to ensure secure energy supplies. Dr. Fatih Birol Executive Director International Energy Agency OIL MARKET REPORT 2017 3 2017 OECD/IEA, © ACKNOWLEDGEMENTS ACKNOWLEDGEMENTS This publication was prepared by the Oil Industry and Markets Division (OIMD) of the International Energy Agency (IEA). Its main authors are, Toril Bosoni, Olivier Lejeune, Peg Mackey, Matthew Parry, Alfredo Peral, Kristine Petrosyan and Xiwei Emma Zhou. Nestor Abraham provided essential research and statistical support. Deven Mooneesawmy provided editorial assistance. Neil Atkinson, head of OIMD, edited the Report. Keisuke Sadamori, director of the IEA’s Directorate of Energy Markets and Security, provided guidance. Other IEA colleagues provided important contributions including Ali al-Saffar, Alessandro Blasi, Tyler Bryant, Emmanouil Christinakis, Davide D’Ambrosio, Kate Dourian, Marc Antoine Eyl-Mazzega, Nathan Frisbee, Marine Gorner, Tim Gould, Joerg Husar, Costanza Jacazio, Pharoah Le Feuvre, Cuauhtemoc Lopez-Bassols, Christophe McGlade, Pawel Olejarnik, Erica Robin, Sacha Scheffer, Renske Schuitmaker, Samuel Thomas, and Laszlo Varro. The IEA Communications and Information Office provided production assistance and launch support. Particular thanks to Rebecca Gaghen and her team; Muriel Custodio, Adrien Chorlet, Astrid Dumond, Christopher Gully, Jad Mouawad, Bertrand Sadin, Rob Stone and Therese Walsh. For questions and comments, please contact the Oil Industry and Markets Division. For contact information, please see https://www.iea.org/oilmarketreport/contacts/ 4 OIL MARKET REPORT 2017 2017 OECD/IEA, © TABLE OF CONTENTS TABLE OF CONTENTS Foreword ................................................................................................................................................. 3 Acknowledgements ................................................................................................................................ 4 Table of Contents .................................................................................................................................... 5 Executive Summary .............................................................................................................................. 11 1. Demand ............................................................................................................................................. 15 Highlights ................................................................................................................................... 15 Summary ............................................................................................................................................... 16 OECD Demand ....................................................................................................................................... 23 Americas ............................................................................................................................................ 24 Europe ............................................................................................................................................... 26 Asia Oceania ...................................................................................................................................... 27 Non-OECD Demand ............................................................................................................................... 28 Africa ................................................................................................................................................. 28 Asia (non-OECD) ................................................................................................................................ 30 Europe (non-OECD) ..........................................................................................................................