Oil prices continue to face upward price pressure because of supply uncertainty resulting from ongoing unrest in the oil-producing regions of the Middle East and North Africa. However, there may be downward price pressure if Libya is able to ramp up oil production and exports sooner than anticipated. At the same time, downside demand risks continue as fears persist about weakening global economic growth, contagion effects of the debt crisis in the European Union, and other fiscal issues facing national governments.
Given expected rates of global oil consumption growth, the engine for which will be emerging markets outside of the Organization for Economic Cooperation and Development (OECD), a combination of increased oil output from members of the Organization of the Petroleum Exporting Countries (OPEC) and inventory withdrawals will need to supplement non-OPEC supply growth in order for the oil market to balance at the prices projected in this Outlook.
Global Crude Oil and Liquid Fuels Consumption
EIA expects that world crude oil and liquid fuels consumption will grow from its record-high level of 87.1 million barrels per day (bbl/d) in 2010 to 88.2 million bbl/d in 2011 and 89.6 million bbl/d in 2012 (World Liquid Fuels Consumption Chart). China and other emerging economies account for all of the projected crude oil and liquid fuels consumption growth through 2012. Consumption in member countries of the OECD is projected to decline by 0.4 million bbl/d in 2011 and to remain relatively flat in 2012.
EIA projects that non-OPEC liquid fuels production will grow by 0.4 million bbl/d in 2011 and 1.1 million bbl/d in 2012, to an average of 53.3 million bbl/d next year (Non-OPEC Crude Oil and Liquid Fuels Production Growth Chart). The largest sources of expected growth in non-OPEC oil production over the forecast period are Canada, China, Colombia, Kazakhstan, and the United States, with average annual growth in each country of over 100 thousand bbl/d. In contrast, forecast Russian and Mexican projected production is lower at the end of the forecast period. Regional turmoil, particularly in Syria and Yemen, exerts additional pressure on the non-OPEC outlook and on global oil prices.
EIA revised Brazil's liquids fuels production forecast downward for both 2011 and 2012 by 140 thousand bbl/d and 90 thousand bbl/d, respectively. The revisions are due to the decrease in projected ethanol production resulting from a poor sugar cane harvest and reduced investment. However, EIA expects that Brazil's crude oil production will continue to increase through the forecast period.