World Oil Outlook - Opec

This year’s World Oil Outlook (WOO) demonstrates that oil will continue to play a
major role in satisfying world energy needs. It also stresses the demand uncertainties
that blur the future of oil in the medium- to long-term.
Five years after the onset of the financial crisis, and despite the extraordinary fiscal and
monetary support, the economic recovery remains fragile, the risks stemming from the
Euro-zone debt crisis appear to be heightening, economic growth in major developing
countries is facing strong headwinds, and many financial institutions are under stress and
in a deep process of deleveraging. World economic prospects are thus highly uncertain.
Policy and technology are affecting demand for oil, in particular the transportation sector.
While oil resources are recognized as amply sufficient to satisfy future needs, shale gas and
tight oil are changing future prospects in the long-term. The refining system needs to go
through a profound rationalization and adaptation process, given the future product mix
and more stringent quality specifications. The Durban United Nations Climate Change
Conference in 2011 and the Rio+20 Summit in June 2012 launched important multilateral
processes, the outcome of which, although still to be agreed, will be of great significance.
Geopolitical tensions add another layer of uncertainty, when looking to the future.
The WOO calls for serious monitoring of future developments in the energy scene
and to remain alert to various possible outcomes.
Oil price assumption slightly higher than in the previous WOO
This year it is assumed that the OPEC Reference Basket (ORB) nominal price remains
at an average of $100/b over the medium-term, before rising with inflation to
reach $120/b by 2025. Longer term, real prices are set to rise slightly and nominal
prices thereby reach $155/b by 2035. The key basis for making such assumptions for
the Reference Case’s medium- to long-term outlook remains the perception of how
the costs of supplying the marginal barrel might evolve, as well as taking into account
the effects of depletion, an increasing supply of oil from more remote and harsher
environments, and the impacts of stricter environmental protection on costs. The extent,
to which these costs rise, is tempered by the impacts of continued technological
developments.
Short- and medium-term economic growth assumptions reflect Euro-zone crisis
Short-term economic growth rates see a downward adjustment compared to the WOO
2011. The estimate for the 2012 global economic growth rate is around 1% lower
than assumed previously. OECD Europe gross domestic product (GDP) remains approximately
flat in 2012, compared to the WOO 2011 expected growth rate of 1.9%.
The impact of the Euro-zone crisis is expected to continue to be felt in Europe in
2013, which has led to an assumed growth rate of just 0.5% for OECD Europe in
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Executive summary