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Chemical products become the main driver of oil demand growth

Chemical products become the main driver of oil demand growth

(Summary description)On April 23, the International Energy Agency (IEA) joined forces with the International Petroleum Economy to publish the IEA Oil Market Report 2018 in Beijing.

Chemical products become the main driver of oil demand growth

(Summary description)On April 23, the International Energy Agency (IEA) joined forces with the International Petroleum Economy to publish the IEA Oil Market Report 2018 in Beijing.

Information

  On April 23, the International Energy Agency (IEA) joined forces with the International Petroleum Economy to publish the IEA Oil Market Report 2018 in Beijing. The report predicts that the oil market will go through two phases in the next 6 years. The record crude oil supply of non-Petroleum Exporting Countries (OPEC) countries before 2020 will exceed the growth in demand; however, until 2023, if investment continues to be insufficient, The buffered effective reserve capacity will only reach 2.2% of demand, and oil prices may fluctuate before new supplies are put into production. Chemical products will be the main driving force for increasing oil demand.

 

  The "Oil Market Report 2018" released this time has analyzed and forecasted the international oil market in the next 6 years (2018-2023). The IEA believes that the current level of global oil inventories is very low and oil prices have rebounded. Rising oil prices have brought returns to production-reducing countries, and have also promoted a new round of oil production growth in the United States. In addition, Brazil, Canada and Norway and other countries have increased production. It is expected that the record crude oil supply of non-OPEC countries will exceed demand growth by 2020. Needs can be met. However, the market still needs more investment to ensure supply security to meet future strong oil demand.

 

  From the perspective of demand, in the early part of the outlook period, the global economic growth rate is 3.9%, and strong world economic growth supports the growth of oil demand. It is expected that the growth rate of oil demand will reach an average annual rate of 1.2 million barrels per day (expected to increase by 1.4 million barrels per day in 2018, and the growth rate will slow to 1 million barrels per day by 2023). The oil demand in 2023 will reach 104.7 million barrels per day / Day, an increase of 6.9 million barrels / day compared to 2017. Among them, China and India will contribute nearly 50% of the growth in global oil demand. China's oil demand growth rate to 2023 will slow down compared to 2010 to 2017, and India's oil demand growth rate will increase slightly.

 

  According to the report, chemical products are one of the main driving forces for the growth of oil demand. Among the fastest growing global oil demand is chemical products, especially in the United States and China. The US shale gas revolution has opened up a major source of cheap raw materials for the chemical industry. By 2023, 25% (approximately 1.7 million barrels per day) of global new oil demand will come from ethane and naphtha.

 

  In addition, changes to the International Maritime Organization (IMO) marine fuel specifications will pose significant challenges to the marine and refining industries. The new regulations will lead to the replacement of high-sulfur fuel oil with marine diesel or new low-sulfur fuel oil. The impact of product structure changes is a major uncertainty in the forecast.

 

  From a supply perspective, investment in the upstream sector has recovered only marginally. Global upstream investment declined historically by 25% in 2015 and 2016, respectively. Investment in 2017 remained the same as the previous year, and recent data shows that it only grew moderately in 2018. Moreover, the vast majority of investment is concentrated in the United States' light dense oil (LTO) sector. In addition, the aging of global oil fields will result in a supply loss of 3 million barrels per day. On the one hand, the current investment must make up for the reduction in old oil fields and maintain current production, while also meeting future demand growth.

 

Driven by light tight oil, US oil production will increase by 3.7 million barrels per day in 2023, which will exceed half of the global total capacity increase of 6.4 million barrels per day. The total oil output of the United States will reach nearly 17 million barrels per day, almost equal to its domestic oil demand, and will become the world's largest oil producer. Brazil, Canada and Norway will also contribute to supply growth. Non-OPEC oil-producing countries can meet global demand growth by 2020. (International Petroleum Network)

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