Very usefull links


News links




Dow Jones

Oil price



Views and News





Higher oil prices set to moderate and demand growth: Kemp

By John Kemp

Petroleumworld 06 18 2018

Growth in global oil consumption has accelerated significantly since prices slumped in 2014 – highlighting the critical role demand plays in balancing the market.

Lower oil prices stimulated OECD consumption between 2015 and 2017 and played a big role in eliminating the global oil market surplus during the rebalancing phase of the cycle.

With oil prices up 70 percent over the last 12 months, however, higher prices are set to moderate OECD consumption and thereby global demand growth in 2018/19.

Economists often observe that the price-elasticity of oil demand is low, meaning a small change in prices does not have much impact on the amount consumed in the short term.

But low impact does not mean no impact. In the case of a large and sustained change, such as occurred in 2014/15, consumption has proved significantly flexible and plays a key role in rebalancing the market.

According to the latest estimates from BP, global consumption increased by almost 1.7 million barrels per day (bpd) in 2017 (“Statistical Review of World Energy”, BP, 2018).

Consumption has risen by an average of 1.7 million bpd in the last three years since oil prices slumped (2015-2017) compared with an average of just 1.1 million bpd in the three previous years (2012-2014).

Real crude oil prices averaged $51 per barrel between 2015 and 2017, down from $112 between 2012 and 2014, according to BP.


Lower oil prices have helped stimulate faster consumption growth, especially in the industrialised countries of the Organisation for Economic Cooperation and Development ( ).

OECD consumption rose by an average of 580,000 bpd in 2015-2017 compared with an average decline of 280,000 bpd in 2012-2014.

By contrast, growth in the non-OECD economies slowed slightly, to an average annual rate of 1.2 million bpd from 1.4 million bpd earlier.

Faster growth in the OECD economies has accounted for all the acceleration in global fuel consumption since the slump.

The BP data underscores the important role that oil price and consumption changes in the advanced economies play in balancing the market.

Consumption in the rapidly developing non-OECD economies tends to be more strongly influenced by incomes and economic growth.

In the more mature OECD economies, however, consumption is more strongly influenced by large and sustained price changes.


Non-OECD economies now account for the majority of global oil consumption (51 million bpd) compared with the OECD countries (47 million bpd).

Non-OECD economies also accounted for all consumption growth over the last ten years (+14 million bpd) while OECD consumption fell (-3 million bpd).

Even in the most recent three-year period, non-OECD use rose much faster (+3.5 million bpd) than in the OECD (+1.7 million bpd).

Non-OECD countries' strongly rising oil demand linked to their economic development has been the principal driver of increasing oil consumption at global level.

But on a year-to-year basis, consumption changes in the more price-sensitive OECD have played a critical role in stimulating or moderating the growth rate.

In other words, the non-OECD economies are responsible for the overall rising trend in consumption but the non-OECD economies are significantly responsible for year-to-year variations in growth around that trend.


OECD oil consumption may now account for a minority of global demand, and the annual changes may be relatively small, but they still play a critical role in market balancing.

The impact is clear in consumption statistics at national level, especially for the United States, where low levels of taxation ensure changes in crude prices have a big impact on the final cost of fuels to consumers.

U.S. gasoline consumption increased by an annual average of 133,000 bpd in 2015-2017 compared with an average of just 56,000 bpd in 2012-2014, according to the U.S. Energy Information Administration.

Consumption growth was especially pronounced in 2015 (+257,000 bpd) and 2016 (+139,000 bpd) when prices were low, compared with the much higher-priced 2011 (-240,000 bpd) and 2012 (-71,000 bpd).

The EIA currently predicts U.S. gasoline consumption will increase by just 20,000 bpd in 2018 and 40,000 bpd in 2019 (“Short-Term Energy Outlook”, EIA, June 2018).


Twitter: @petroleumworld1

Hit your target - Advertise with Us

Story by John Kemp from Reuters. 06 14 2018

We invite all our readers to share with us
their views and comments about this article.
Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1

November 13 - 15, 2018.

Gubkin University, Moscow
SPE Student Chapter








Editor & Publisher:Elio Ohep/
Contact Email:

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.