Medium-Term Oil Market Report

International Energy Agency

2310-4651 (online)
2310-4643 (print)
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The Medium-Term Oil Market Report provides IEA forecasts on oil markets for the coming five years as well as an in-depth analysis of recent developments in global oil demand, supply and trade.

Medium-Term Oil Market Report 2015

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International Energy Agency

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10 Feb 2015
9789264229310 (PDF) ;9789264229303(print)

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The recent oil market sell‑off, brought on by deep imbalances after years of record-high prices, will likely prove a milestone in the history of oil.  However prices eventually evolve, markets may never be the same.  This edition of the Medium-Term Oil Market Report sizes up the magnitude of this transformation so far and sketches the oil landscape at the 2020 horizon.

It is not just oil price signals that have changed, but also the market’s responsiveness to them. On the supply side, this Report’s forecast reflects not just lower price assumptions, but also the high price-sensitivity of US light tight oil compared to conventional crude, as well as OPEC’s embrace of market forces in late 2014 in a bid for market share.  On the demand front, it shows how the response to lower prices will differ in a low-growth, deflationary environment compared to a higher-growth one.

Not all factors can be easily predicted. Much hangs on the outcome of talks between Iran and the “P5+1” on that of Islamist violence in oil-producing countries, and on future relations between Russia and the West. Such geopolitical risk factors are themselves a defining feature of the oil market for the medium term.

As in previous editions, this Report also offers key projections of global refining capacity, crude trade flows and product supply, this year with special focus on the impact of changing bunker fuel legislation.

Rarely has the oil market faced changes as sweeping as today. That makes the insights from the IEA 2015 Medium-Term Oil Market Report all the more timely and valuable.

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Table of Contents

Foreword 3
Acknowledgements 4
Executive summary 10
-Prices 12
-Demand 13
-Bunkers 14
-Supply 14
-Biofuels 15
-Crude and product trade 15
-Refining and product supply 16
1. Demand 17
-Summary 17
-Overview 18
-OECD demand 22
-Non-OECD demand: lower oil prices provide only modest support 25
-Sea change in retail pricing 31
-Communication goes virtual rather than physical 32
-Fuel switch and efficiency 32
-China shifts gears 34
-The changing demand barrel 37
-Slowing pace of dieselisation 39
-Changes in marine transportation and the distillate outlook 40
2. Supply 41
-Summary 41
-A new chapter in oil supply 42
-OPEC’s diverging supply paths 44
-OPEC gas liquids supply 57
-Non-OPEC supply growth weakens on lower oil prices 58
-North America remains backbone of non-OPEC growth 60
-Russia is the biggest casualty of the price fall 65
-Brazil encounters project delays, low oil prices 67
-Mexico sees marginal growth 68
-North Sea suffers setback 70
-Caspian growth elusive 71
-Asian projects already underway deliver 72
-Political strife clouds outlook in Africa/Middle East 73
-Biofuels supply 76
-Regional outlook 77
-Advanced biofuels 79
3. Crude trade  80
-Summary 80
-Overview and methodology 80
-Regional developments 84
-Exports from OECD Americas seen rising to 1.0 mb/d by 2020 84
-European imports to steadily decline 85
-OECD Asia Oceania to diversity crude imports 86
-End in sight for the Asian premium? 86
-Middle East to fight for market share, Iran a wild card 87
-Supply constraints to curb FSU shipments 88
-African exports to be squeezed 89
-Demand growth and refinery expansion to curb Latin American exports 89
4. Refining and Product Supply 92
-Summary 92
-Refinery capacity surplus bounces back after dip 93
-Wave of new capacity coming on-stream in the non-OECD 94
-Non-OECD Asia continues to lead growth 95
-The Middle East establishes itself as a major downstream player 95
-Modest growth expected in the non-OECD Americas 96
-African downstream to enter the major league? 96
-Russian tax law signed into law: delay sees runs maintained in near term 97
-More OECD closures in the cards 98
-OECD Americas: surging LTO, condensate supply drive expansion 98
-European refiners invest to survive 99
-OECD Asia refinery consolidation continues apace 100
-Product supply balances 102
-Light distillates markets remain well supplied 107
-Middle distillates to remain refinery mainstay through 2020 108
-Fuel oil collapse as bunkers switch to lower sulphur fuels 110
5. Sea change in bunker fuels 112
-Summary 112
-Overview 112
-Bunker demand today and tomorrow 114
-Bridging the gap in vessel emission rules 115
-Options for meeting new emission standards 116
-On-board abatement technology 116
-Marine gasoil 117
-LNG 117
-Enforcement issues 119
-Industry response 119
-Impacts upon the product supply chain 120

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