Overview:

Introduction

The price of crude oil simultaneously reflects and directs the performance of the global economy, the costs businesses and consumers face and the performance of other commodities and financial indicators. In the past 12 months we have seen crude oil markets effectively tracking equities, unsure of the strength of the economic recovery. How will fundamentals play out in the next decade?

Scope

*A three scenario price forecast for crude oil prices to 2020, each based upon alternative economic growth and geopolitical scenarios
*An analysis of the economies of major oil demand growth regions across the globe, including an assessment of China's role in oil demand
*An in-depth study of the 24 largest oil producing state's supply outlook. Each entry assess the geology, recent investment and political climate

Highlights

The global economy has rebounded far more vigorously than expected. Non-OECD growth is supporting oil demand and thus prices. This contrasts with the developed Western economies, where growth remains sluggish. Tightening efficiency regulations and the on-going shift to service-based economies in these regions will keep oil demand growth subdued.

Total non-OPEC liquids supply is seen increasing through most of the next decade but this growth rate declines to zero by 2019, when output peaks. The vast majority of the growth in supply derives from unconventional output. This includes bio-fuels, ethanol, GTL and NGLs. Without this growth, Non-OPEC conventional crude supply peaks around 2015.

Total OPEC production capacity is set to increase by nearly 6mb/d between 2008 and 2015. This growth is largely due to projected increases in capacity in Saudi Arabia and Iraq. The projected call on OPEC is an estimate of the difference between global demand and total non-OPEC supply.

Reasons to Purchase

*Forecast supply, demand and price of oil to 2020, based upon geological surveys, sophisticated econometric modelling and political analysis
*Model the impact of alternative economic or geopolitical scenarios on the price of oil and prepare your business accordingly
*Understand the key issues affecting current and future supply dynamics in the world's 24 largest oil producers

Overview 1
Catalyst 1
Summary 1
Methodology 1
Executive Summary 2
Table of Contents 3
Analysis 4
Demand 4
Oil prices in the first half of 2010 continued to be driven by attitudes towards the health of the global economic recovery 4
Mixed economic indicators, especially from regions of high and rising energy demand, meant oil markets struggled to find a strong price signal 5
Faith in China is playing a critical role in supporting oil prices above $70/bbl but the economy faces structural challenges and may be slowing 6
The revaluation of the RMB is unlikely to materially affect Chinese oil demand; weak export markets for manufactures pose a greater threat 7
In the long run, China's oil demand remains assured: the recession briefly slowed growth in consumption but underlying macro-trends imply huge demand growth 8
European economies remain fragile and policy makers now enjoy precious little manoeuvrability: sovereign risk has become a threat to the recovery 9
The US economy remains dependent on inventory building and fiscal stimulus but growth in middle distillates demand suggests recovery 10
European and North American oil demand is already in decline on account of efficiency savings and growth in the relative size of the tertiary sector 11
The outlook for key emerging economies suggests bullish oil demand, driven by growing populations, economies and continuing subsidies 13
Summary: Although the unbalanced economic outlook has kept prices subdued, demand is expected to exceed 2007's peak of 87 mbpd 2011 14
Non-OPEC crude oil supply 15
Non-OPEC supply will increasingly come to rely upon unconventional sources and is expected to peak around 2019 15
Argentine oil production is unlikely to recover to 1999 levels 16
Azerbaijan's output will not peak before 2015 but will go into steep decline thereafter 17
Brazil's output will exceed 3.5 million bpd by 2015 18
Chinese domestic crude oil production will peak around 2015 19
Canada is now the United States' main source of crude oil imports into the United States 20
Equatorial Guinea's production will not exceed 500,000b/d 21
Indonesian output will increase to 2015 but decline thereafter 22
Production has increased rapidly in Kazakhstan since 1998 23
Technology is the key to halting Mexico's declining output 24
Norway's oil fields are mature but still attract investment 25
Contrary to predictions, Russian output has not declined 26
Small discoveries have not offset declining output in the UK 27
Despite the moratorium, US output will actually increase in 2010 28
OPEC crude oil supply 29
From 2015, OPEC's spare production capacity as a proportion of global demand will begin to decline 29
Algeria's oil sector is in disarray, following the dismissal of oil minister and reformist Chekib Khelil 30
Angola has the potential to produce 2.5mb/d by 2017 31
Iran's oil output depends upon foreign direct investment and sophisticated technology 32
Iraq's government has set ambitious targets for output but even if these are not met production will still increase substantially 33
Kuwait's key field, Burgan will be replaced through investment in smaller fields such as Abdali, Bahra and Ratga 34
Libya's political situation has caused the recent growth in production to stall 35
Nigerian oil production growth in the short term will be driven by off-shore activity 36
Qatar's recent increase in output is a function of enhanced oil recovery technology, in turn driven by foreign direct investment 37
Saudi Arabia will bring the Manifa field on stream by 2015, with a view to replacing the declining output from Ghawar field 38
Output from the United Arab Emirates is set to increase 30% to 3.5mb/d by 2018 39
Venezuela plays a critical role and will increase output to 3mb/d by 2015 assuming the political climate does not become any more volatile 40
Outlook 41
Under a medium growth economic scenario, the market remains relatively soft until around 2015, when capacity begins to tighten 41
Oil futures are currently tracking equities markets as investors gauge the resilience of the economic recovery but fundamentals point to growth 41
APPENDIX 42
Methodology 42
Further reading 43
Ask the analyst 44
Datamonitor consulting 44
Disclaimer 44

List of Figures
Figure 1: Oil prices and equities markets remain closely correlated 4
Figure 2: Regions by share of global oil demand in 2009 5
Figure 3: Year on year change in oil demand ('000bbl/d) 2008 - 2009 6
Figure 4: 44% of China's oil demand comes from transportation of which 129 million tons of oil equivalent (Mtoe) are used for road transport 8
Figure 5: Chinese Freight and passenger road transport demand will increase to over 243Mtoe by 2020 9
Figure 6: Government debt as a percentage of GDP 10
Figure 7: Weekly US Middle Distillate Demand change from previous year 11
Figure 8: Passenger vehicle fuel economy standards by region (forecasts are based upon legally binding mandates) 12
Figure 9: Global oil demand will exceed 90mb/d by 2014 14
Figure 10: Non-OPEC supply by region, plus unconventional liquids 2008 - 2020 15
Figure 11: Argentina Oil production 1985 - 2020 16
Figure 12: Azerbaijan Oil production 1985 - 2020 17
Figure 13: Brazil Oil production 1985 - 2020 18
Figure 14: China Oil production 1985 - 2020 19
Figure 15: Canada Oil production 1985 - 2020 20
Figure 16: Equatorial Guinea Oil production 1985 - 2020 21
Figure 17: Indonesia Oil production 1985 - 2020 22
Figure 18: Kazakhstan Oil production 1985 - 2020 23
Figure 19: Mexico Oil production 1985 - 2020 24
Figure 20: Norway Oil production 1985 - 2020 25
Figure 21: Russia Oil production 1985 - 2020 26
Figure 22: United Kingdom Oil production 1985 - 2020 27
Figure 23: United States Oil production 1985 - 2020 28
Figure 24: OPEC spare capacity will increase to 2014 29
Figure 25: Algeria Oil production 1985 - 2020 30
Figure 26: Angola Oil production 1985 - 2020 31
Figure 27: Iran Oil production 1985 - 2020 32
Figure 28: Iraq Oil production 1985 - 2020 33
Figure 29: Kuwait Oil production 1985 - 2020 34
Figure 30: Libya Oil production 1985 - 2020 35
Figure 31: Nigeria Oil production 1985 - 2020 36
Figure 32: Qatar Oil production 1985 - 2020 37
Figure 33: Saudi Arabia Oil production 1985 - 2020 38
Figure 34: UAE Oil production 1985 - 2020 39
Figure 35: Venezuela Oil production 1985 - 2020 40
Figure 36: Global Liquids Supply and Demand Balance 2008 - 2020 41
Figure 37: Under a base case scenario, spot prices reach 130$/bbl by 2020 42