EIA expects global liquid fuels consumption growth of about 0.8 million bbl/d in 2012 and 0.9 million bbl/d in 2013. Despite downside risks to global oil demand, the spot price for Brent crude climbed back above $100 per barrel in July after prices sank below $90 per barrel in June. Markets have rallied around expectations that policymakers in the European Union (EU), China, and the United States will provide more economic stimulus to counteract slowing growth. Additionally, Iran’s threats to block oil from transiting through the Strait of Hormuz have triggered market anxiety and prompted upward price pressure. Although angst over global growth and supply disruptions may continue to contribute to price volatility, EIA believes that Brent crude oil, a benchmark for the global oil price, will average $104 per barrel for the third quarter of 2012. EIA estimates that world liquids consumption will outpace production by 0.9 million bb/d in the third quarter, as world demand reaches its seasonal peak. EIA expects that the significant stock builds that occurred in the first half of 2012 will help relieve global oil markets in the second half of 2012.
Several upside and downside risks could move prices higher or lower than projected. The possibility that the economic situation in EU countries could deteriorate further poses a downside risk to global oil demand and prices, though oil prices will likely rise and fall as perceptions about the likelihood of a deeper crisis evolve. In the current Outlook, consumption in Europe is expected to fall year‐over‐year by 0.4 million bbl/d in 2012 and by a further 0.2 million bbl/d in 2013. The possibility of slower growth in China, which has been a key driver of increased oil demand in recent years, could also curb demand. China’s weakening exports, particularly to Europe, and slower industrial and domestic growth experienced in the first half of 2012 could place downward pressure on oil prices, while prospects for more economic stimulus could swing the pendulum towards higher prices. EIA currently projects annual increases in consumption in China of around 0.4 million bbl/d in both 2012 and 2013. On the supply side, oil prices could be higher than projected in this Outlook if recoveries from supply disruptions are slower than forecast, additional disruptions occur, or supply growth is lower than expected.
World liquid fuels consumption grew by an estimated 0.8 million bbl/d in 2011. EIA expects consumption growth of 0.8 million bbl/d in 2012 and 0.9 million bb/d in 2013, with China, the Middle East, Central and South America, and other countries outside of the Organization for Economic Cooperation and Development (OECD) accounting for essentially all consumption growth. Projected OECD liquid fuels consumption declines by 0.4 million bbl/d in 2012 and by a lesser 0.1 million bbd/d in 2013, buoyed by growth in liquid fuels consumption in the United States.