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World Oil Prices and Production Trends in AEO2008 |
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AEO2008 defines the world oil price as the price of light, low-sulfur crude oil delivered in Cushing, Oklahoma. Since 2003, both “above ground” and “below ground” factors have contributed to a sustained rise in nominal world oil prices, from $31 per barrel in 2003 to $69 per barrel in 2007. The AEO2008 reference case outlook for world oil prices is higher than in the AEO2007 reference case. The main reasons for the adoption of a higher reference case price outlook include continued significant expansion of world demand for liquids, particularly in non- OECD countries, which include China and India; the rising costs of conventional non-OPEC supply and unconventional liquids production; limited growth in non-OPEC supplies despite higher oil prices; and the inability or unwillingness of OPEC member countries to increase conventional crude oil production to levels that would be required for maintaining price stability. EIA will continue to monitor world oil price trends and may need to make further adjustments in future AEOs. In the AEO2008 reference case, the world oil price in 2030 is approximately 18 percent higher than the AEO2007 reference case projection. In inflationadjusted terms (2006 dollars) the world crude oil price reaches $70 per barrel in 2030 in the AEO2008 reference case, as compared with $61 per barrel in the AEO2007 reference case (Figure 30). In AEO2008, for both production and consumption, “liquid fuels” include conventional and unconventional liquids. Unconventional liquids include oil sands, biofuels, extra-heavy oils, gas-to-liquids (GTL), and CTL. World consumption of liquid fuels increases from 85 million barrels per day in 2006 to 113 million barrels per day in 2030 in the AEO2008 reference case. The non-OECD countries, which accounted for 42 percent of world liquids consumption in 2006, are expected to reach 50 percent of the world total in 2022 and 53 percent in 2030, as non-OECD demand for liquid fuels increases from 36 million barrels per day in 2006 to 60 million barrels per day in 2030. Over the same period, OECD consumption increases from 49 million barrels per day to 53 million barrels per day in the reference case (Figure 31). The OPEC share of world liquids production remains at about 41 percent through 2030, while non-OPEC conventional liquids production increases from 48 million barrels per day in 2006 to 56 million barrels per day in 2030. Unconventional liquids production in both OPEC and non-OPEC countries grows rapidly, but with more substantial increases in the non-OPEC countries (to 11 million barrels per day in 2030, compared with 3 million barrels per day for the OPEC countries in 2030). Any long-term projection of world oil prices is highly uncertain. Above-ground factors that contribute to price uncertainty include access to oil resources, investment constraints, economic and other objectives of countries where the major reserves and resources are located, cost and availability of substitutes, and economic and policy developments that affect the demand for oil. Below-ground factors include the volumes initially in place in major petroleum basins around the world (including discovered and undiscovered fields) and the fluid and rock characteristics of undiscovered fields. AEO2008 includes high and low price cases to illustrate the potential impacts of the uncertainties. The high price case assumes that non-OPEC conventional oil resources are less plentiful, and the overall costs of extraction are higher, than assumed in the reference case. The high price case also assumes that OPEC will choose to allow a decline in its market share to 38 percent of total world liquids production. As a result, the oil price increases steadily to approximately $112 per barrel in 2016 ($93 per barrel in 2006 dollars) and $186 per barrel in 2030 ($119 per barrel in 2006 dollars). World liquids consumption rises from 85 million barrels per day in 2006 to 98 million barrels per day in 2030 in the high price case. The low price case assumes that non-OPEC conventional oil resources are more plentiful, and the overall costs of extraction are lower, than in the reference case, and that OPEC will choose to increase its market share to 45 percent. In the low price case, the world oil price falls steadily, to approximately $47 per barrel in 2017 ($39 per barrel in 2006 dollars), and then rises gradually to $69 per barrel in 2030 ($42 per barrel in 2006 dollars). World liquids consumption rises to 132 million barrels per day in 2030 in the low price case.
Contact: Nassir Khilji |
