for Global Oil Demand
The return of fuel subsidies in several emerging market countries may keep oil demand growth on track, muting the price effect on consumer behavior.
Looming IMO regulations, as well as the perpetual precariousness of relying on petroleum for marine transportation in a volatile world market, have prompted shipping fleets to take a fresh look at renewable-powered propulsion.
The reasons for the positive demand revisions come from every region of the global oil market, with stronger economic activity the main reason for the more optimistic outlook.
Although shifts are taking place with EVs, autonomy, and more stringent fuel economy, it is not inevitable that we’ll shortly be in a post-oil world and that demand will peak sooner rather than later.
An extended period of upstream investment cuts and the fact that petroleum products still fuel more than 90 percent of the transportation sector could mean we’re headed for another price spike. But slower economic growth and structural shifts on the demand side could keep another bull market from occurring.
Although global balances have tightened lately, the oil market should remain in surplus for the rest of this year and throughout 2017. Fundamentals will see some periods of draws, but on average, over the next year and a half, supply is expected to remain ahead of demand, according to analysts at JBC Energy.
With China's economy slowing, India has stepped up as the world's main center of oil demand growth. This means its thirst for crude oil imports will continue to grow.
Although the EIA’s International Energy Outlook (IEO) has had a mixed record with its long-term projections, it’s important as a basis for analysis and discussion about the future of the oil market and energy security in general.
A number of supportive elements should keep a floor under prices, while the market will be capped by the ongoing oversupply. For the time being, oil markets are set to remain volatile and range-bound with many competing factors pushing prices in both directions.
Economists have long supported the phasing out of global fossil fuel subsidies as a way to temper global oil demand. The era of cheap oil is finally making these reforms a reality.