By Charles C. Henneman
At the Second Annual CFA Institute Middle East Investment Conference in Abu Dhabi today, Thomas A. Petrie, CFA, Vice Chairman at Bank of America Merrill Lynch, outlined four key factors that will contribute to a likely increase in global oil demand, which he sees rising to approximately 95 million barrels per day (BBD) by 2015, up from approximately 86 million BBD today.
Population growth, economic expansion, changes in consumption patterns, and efficiency trends, Petrie said, will all impact oil demand in various ways.
Petrie explained that increasing energy efficiency trends combined with decreasing population growth in Japan and Europe will likely lead to annual demand contraction of 1.4 million BPD in OECD countries over the next five years. These trends, however, will only partially offset the impact of economic growth in BRIC countries — Brazil, Russia, India and China — and changes in consumption patterns that have already increased automobile sales in China beyond auto sales in North America and Europe. Growth in the Chinese car market alone will increase oil demand.
In non-OECD countries, Petrie estimates that the thirst for oil will approach 50 million BPD by 2015.
Petrie noted that it was unlikely that global production would increase sufficiently to meet growing demand, citing broad constraints imposed by policy makers — primarily due to environmental concerns — on developing existing potential projects. As a result, Petrie said, increasing prices will serve to ration demand.
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