Oil 2019

Analysis and forecasts to 2024

“These are times of extraordinary change for the oil industry. Everywhere we look, new actors are emerging and certainties of past years are fading."
Fatih Birol, Executive Director, IEA


The United States will lead oil-supply growth over the next six years, thanks to the incredible strength of its shale industry, triggering a rapid transformation of global oil markets. By 2024, the United States will export more oil than Russia and will close in on Saudi Arabia – a pivotal milestone that will bring greater diversity of supply in markets.

Meanwhile product markets are on the eve of one of the biggest shakeups ever seen, with the implementation of the International Maritime Organisation’s new rules governing bunker fuel quality in 2020. Although the shipping and refining industries have had several years notice, there have been fears of shortfalls when the rules come into effect.

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Key findings from Oil 2019


	Oil 2019 Forecast	$70/bbl	$80/bbl
2010	0.592	0	0
2011	1.098	0	0
2012	1.98	0	0
2013	2.914	0	0
2014	3.995	0	0
2015	4.69	0	0
2016	4.37	0	0
2017	4.921	0	0
2018	6.304	0	0
2019	7.431	0.338	0.02
2020	8.433	0.785	0.342
2021	9.058	1.016	0.622
2022	9.43	1.068	0.808
2023	9.565	1.198	0.933
2024	9.589	1.351	0.999

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US gross exports overtake Russia and close in on Saudi Arabia

The ability of the US to turn itself into a major exporter in less than a decade is unprecedented. By 2024, US oil exports will overtake Russia and close in on Saudi Arabia. This brings greater diversity of supply to markets.

	Saudi total gross exports	Russia total gross export	US total gross exports
2012	8.827516937	7.929292671	0.683075287
2013	8.761491829	7.835769009	0.829028046
2014	8.581989853	7.53060331	1.742477722
2015	8.914867279	7.950735888	2.093436722
2016	9.417807945	8.256531808	2.207974991
2017	9.000402794	8.257472405	3.134449707
2018	9.538868683	8.376155492	4.496293076
2019	9.364335022	8.609703946	5.934666382
2020	9.432574608	8.817788116	7.417430191
2021	9.257804718	8.73699216	8.264565613
2022	9.465389145	8.668526189	8.179959457
2023	9.528542778	8.605136869	8.904843872
2024	9.523207047	8.505664882	8.927594528

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	US	Brazil	Iraq	Norway	UAE	Guyana	Iran	Venezuela 
	4.075445							
		1.1746138	0.9452499	0.604016	0.5505137	0.4477047		
							-1.1901507	-0.6095319
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Upstream investment rises for third straight year

Such a strong build up of supply will require substantial investment and for a third consecutive year, upstream investment is set to rise. Following higher than expected spending last year, global upstream capex for oil and gas is set to increase by 4% in 2019.

	CAPEX	CAPEX
2014	778.6319383	0
2015	582.6389527	0
2016	433.8820011	0
2017	449.6043346	0
2018	475.3320452	0
2019	0	496.5489753
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Notes: 2019 figures are preliminary based on company announcements

	China	India	Middle East	Rest of the world
2018	0.443806	0.20589	-0.116194	0.74497583
2020	0.31899634	0.22938911	0.16805883	0.63463881
2022	0.31544918	0.24711851	0.14095733	0.51092057
2024	0.16342596	0.16198059	0.12280484	0.53215062
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IMO 2020 triggers a massive products shake-up


One of the biggest shake-ups in the product markets is right around the corner — the IMO 2020 regulation bans high sulfur fuel oil (HSFO) from the bunker pool. Although the shipping and refining industries have been preparing for the new rules for several years, there have been fears of shortfalls when the rules come into effect.

Indeed, the bunker fuel demand landscape will change dramatically in 2020. Demand for HSFO, the main vessel fuel since the 1960’s, will fall from 3.5 mb/d to 1.4 mb/d in just one year. We also estimate that there will be 4 000 scrubbers installed on large vessels by the end of 2020, consuming 700 kb/d of fuel oil.

Many shipping companies will prefer to use marine gasoil (MGO) instead of a new very low sulfur fuel oil (VLSFO), despite its higher price. The quantity of VLSFO produced will initially be limited to 1 mb/d because of reduced availability of low sulphur blending materials. Some shipping companies may also be reluctant to adopt a new fuel immediately, and would prefer to use MGO until they have confidence that VLSFO will be easily available in ports and stable and compatible with similar grades.

While there is no doubt that this transformation will be a challenge, it will be manageable over time. Orders for scrubbers to be fitted on ships have increased, and as demand for high sulphur fuel oil plummets there will be enough marine gasoil as well as new ultra-low sulphur fuel oil available to fill the gap.

	Unscrubbed HSFO	Scrubbed HSFO	MGO	VLSFO
2015	3.02	0	0.855	0
2016	3.22	0	0.84	0
2017	3.296	0	0.853	0
2018	3.384	0	0.872	0
2019	3.13229739	0.34170261	0.892	0
2020	0.705394096	0.679605904	1.979	1.013
2021	0.297673467	0.899326533	1.913	1.365
2022	0.105296392	0.978703608	1.871	1.599
2023	0.082584107	1.008415893	1.826	1.706
2024	0.059871822	1.038128178	1.783	1.812
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	API gravity	API gravity
Average crude	33	0
Shale crudes	0	45
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	Sulphur content	Sulphur content
Average crude	1.19	
Shale crudes	0	0.3
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