Section One

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Chapter 1 World oil trends: overview of the Reference Case Main assumptions Oil price In last year’s World Oil Outlook (WOO), the nominal OPEC Reference Basket (ORB) price assumption to 2020 in the Reference Case was $75–85/b. This was slightly higher than the range of prices that had been observed over the period that led up to the publication of the WOO 2010 (see Figure 1.1). Nominal prices in last year’s report rose to $106/b by 2030. This year, however, a revision to these assumptions is warranted. This is explained by a number of factors: • The behaviour of prices since the publication of the WOO 2010; • Signals from the futures price; • A reassessment of how upstream costs might evolve; • Continued attention being paid to how environmental concerns may eventually impose additional costs on oil; • Emerging views of a weakening linkage between oil prices and the economy/oil demand; • Impacts of dollar exchange rate movements; and • Revised budget requirements in OPEC Member Countries. The average daily ORB price has moved in the range of around $80 to over $120/b since publication of the WOO 2010. This on its own points to the probable need for higher assumptions to 2020 than last year’s $75–85/b. The ORB’s continuous upward movement was driven in part by positive macroeconomic data and some supply concerns. In addition, speculation was also a driving force in the price rise, with increasing investor interest in the crude oil paper market, particularly in Intercontinental Exchange (ICE) Brent contracts, also playing a part. Speculator activity on the Nymex surged to record highs in the first quarter of 2011. For example, by mid-March, open interest for the Nymex West Texas Intermediate (WTI) exceeded the unprecedented level of 1.5 million futures contracts, which is 18 times higher than the amount of daily traded physical crude. A risk premium has 25 Chapter 1
26 Figure 1.1 OPEC Reference Basket prices since WOO 2009 130 120 110 100 90 80 70 60 Jul 2009 Figure 1.1 Figure 1.2 been embedded in the prices seen throughout much of 2011, partly reflecting such concerns. As such, the most recent behaviour of prices should not directly feed into births per 1,000 assumptions populationfor prices over the medium- and long-term. It is worth noting that regulatory 45 reforms are moving ahead to address issues related to the impact of speculative activity (Box 1.1). Moreover, since ORB prices peaked above $120/b in April, prices 40 have gradually fallen to lower levels, below $100/b in October. 35 as a signal 30 for where long-term sustainable prices might settle. As noted, speculation Developing countries has exaggerated price movements, World and this was particularly evident in 2008, when the 25 wild swings 20 of this period were clearly mostly driven by non-fundamentals, although 10 $/b Oct 2009 Jan 2010 Pre-WOO 2010 Apr 2010 Jul 2010 Oct 2010 Jan 2011 Post-WOO 2010 Apr 2011 Jul 2011 WOO 2010 nominal range to 2020: $75–85/b Oct 2011 It would be inappropriate to place too much emphasis on recent price patterns ORB peaked at $141/b in July, before falling to $33/b by the end of that year. The the downward pressures on prices at that time were also affected by fundamentals, as 15 seen in the fact that OPEC had to cut its supply. OECD A more technical approach than using current price behaviour as an indicator 5 of possible future trends, at least for the short-term, is the behaviour of the futures price. The 0 March 2011 OPEC Monthly Oil Market Report (MOMR), for example, 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
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Page 6 and 7: Box 1.1 Regulatory reform in the en
Page 8 and 9: commodities, the OTC market also in
Page 10 and 11: IHS CERA upstream capital cost MOVE
Page 12 and 13: in the strength of the dollar: in N
Page 14 and 15: to this, there is the dominance of
Page 16 and 17: Although these reduced growth targe
Page 18 and 19: Global and regional population leve
Page 20 and 21: average of 67% of the population in
Page 22 and 23: Table 1.3 Population by urban/rural
Page 24 and 25: Figure 1.8 Real GDP by region in 20
Page 26 and 27: Policies The Reference Case retains
Page 28 and 29: electric vehicles, which focuses on
Page 30 and 31: Box 1.5 Shale gas: recent developme
Page 32 and 33: 40 years. While the early high perf
Page 34 and 35: Box 1.6 After Fukushima: unclear fo
Page 36 and 37: is Japan itself, which has been ask
Page 38 and 39: Figure 1.13 Fossil fuel use per cap
Page 40 and 41: Table 1.6 Medium-term Reference Cas
Page 42 and 43: Table 1.7 World oil demand outlook
Page 44 and 45: low, and well below levels seen in
Page 46 and 47: has also taken into account the pot
Page 48 and 49: stronger than previously expected s
Page 50 and 51: d 0 Conventional Figure 1.22 US & C
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different picture. By 2035, Annex I
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78 0 Figure 2.2 The distribution of
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80 Table 2.1 Vehicle and passenger
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82 0 1970 1974 1978 1982 1986 1990
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n (millions) 7,000 84 0 China Brazi
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ion (millions) 7,000 6,000 5,000 4,
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88 Conventional powertrain technolo
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90 acquisition costs, and the lower
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92 Figure 2.9 Increase in oil consu
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94 rose by an average of more than
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96 Table 2.10 Oil demand in rail an
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98 Table 2.13 Oil demand growth in
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100 Table 2.14 Oil demand in the pe
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102 2.5 2.0 10 1.5 81.0 60.5 0 mboe
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104 Figure 2.15 Share of industry i
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106 Figure 2.16 Figure 2.16 Oil use
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108 Table 2.19 Oil demand growth in
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110 from 63% to 10% in Southeast As
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112
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114 In Canada, although the Outlook
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116 Non-OPEC Latin America’s prod
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118 additional supply of 180,000 b/
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120 limiting factor for feasible su
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122 Table 3.4 Medium-term non-OPEC
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124 some deposits will not be suffi
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126 1.8 mb/d in 2010, to 2.7 mb/d i
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128 Of utmost importance, in respec
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130 influences and, therefore, brin
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132 early support given to Brazil
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134 the call on OPEC crude by 2035
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136 us to cooperate to lay the foun
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138 Figure 4.1 Table 4.6 Oil supply
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140 COP-16, held in Cancun at the e
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142 in Article 4, paragraph 8, of t
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144 identifies sustainable long-ter
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146 Beyond the oil sector, there ar
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148 other international research an
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Section One

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