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Macro Oils short-term outlook: risk to demand, OPEC production restraint and economic concerns

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07 June 2019

Macro Oils short-term outlook: risk to demand, OPEC production restraint and economic concerns

Report summary

Uncertainty about economic growth has weakened oil prices in recent weeks. For this monthly update, we are assuming no further tariffs beyond the early May escalation. On that basis, world oil demand in 2019 is forecast to grow 1.1 million b/d and for 2020 by 1.6 million b/d. We continue to show a tightly balanced market in Q3 2019 which will support prices and allow some recovery. Economic risk has increased, but for now the US government has backed off from its military threats against Iran. That removes the premium in price we saw earlier even while sanctions are cutting into Iran’s oil exports sharply. Key highlights from this month’s outlook are: -What to watch in demand: China’s diesel, the source of US growth, assessing the impact on demand if tariffs escalate, downward revisions to Iran and Venezuela supply, OECD crude stocks to fall H2 2019, and Lower 48 and non-OPEC growth.

Table of contents

  • Global supply: slowdown in growth as further downgrades made to OPEC
  • Non-OPEC supply
  • US Lower 48
    • Iran: crude oil exports fall lower than expected in May
    • Venezuela: lower crude production expected in summer 2019
    • Global liquids demand grows by +1.1 million b/d in 2019 and +1.6 million b/d in 2020
  • Three things to watch: China's diesel, US demand growth by source, Iran/Venezuela
  • Tariff escalation scenario: a possible downside impact of over 400 kb/d by 2020

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