It’s the end of the year and authorities of various caliber and standing are making oil price forecasts for next year. This wealth of information can be confusing because of its sheer quantity, but here’s a twist: it’s enough to focus on trends in just two countries to catch a glimpse of the immediate future of oil.
The two countries, of course, are China and India. They are among the world’s top oil consumers, together accounting for almost a fifth of global oil consumption, as Reuters’ John Kemp noted in a recent column that tackled the issue of oil price forecast complexity.
However, China is the world’s most important driver of the global oil market being the world’s largest economy based on purchasing power parity (PPP), the largest crude oil importer with imports almost hitting 11 mbd this year and also accounting for 85% of global oil demand growth. Furthermore, its petro-yuan is competing with the petrodollar for supremacy in the global oil trade.
Both China’s and India’s dependence on oil imports is accelerating. By 2020 China’s oil imports will account for 75% of its consumption and is projected to rise to 82% by 2025 while India’s imports will account for 87% of its consumption and is projected to rise to 91% by 2025.
And with the steep decline in US shale oil production, US oil imports will soon resume their upward trend. In 2019 the United States consumed almost 21 mbd based on demand growth from 2018 according to the authoritative 2019 OPEC Annual Statistical Bulletin and claims to have produced 12.3 mbd thus necessitating imports of 8.7 mbd. Therefore, the United States’ importance as an oil importer will grow in coming years.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London