Oil outlook to 2020

The OPEC Conference in 2000 developed a price band target of 22-28 US dollars per barrel for the Basket of OPEC crudes, in a bid to stabilise prices. This decision was made in the wake of a 12-month period that had seen tremendous fluctuations, with prices ranging from below 10/b US dollars to above 30/b US dollars. It was expected that the identification of the new price band would play a major role in stabilising oil prices, to the benefit of both producer and consumer. The assessment of potential medium-to-long-term prospects for the oil market, contained herein, are intimately related to these important developments in international oil markets, as well as our understanding of evolving fundamentals. Part 1 of this article, developed using OPEC's World Energy Model (OWEM), describes the reference case. From the demand side, a detailed analysis of both economic growth and intensity movements is used to project the growth of oil demand that can reasonably be expected over the next two decades. A resource-based approach is used to determine feasible longer-term production, utilising the latest data made available last year by the US Geological Survey. The rest of the article deals with various scenarios. The price scenario section considers the impact of high prices, beyond 30/b US dollars, and questions their sustainability. The next section deals with tax scenarios, and shows the extent to which oil demand has been reduced by historical developments in oil product taxation. Finally, a slow growth scenario explores the implications of a pessimistic view of economic growth over the coming years. (author)