Spencer Dale, chief economist
Global proved oil reserves in 2017 fell slightly by 0.5 billion barrels (-0.03%) to 1696.6 billion barrels, which would be sufficient to meet 50.2 years of global production at 2017 levels.
Higher reserves in Venezuela (up by 1.4 billion barrels) was outweighed by declines in Canada (-1.6 billion barrels) and smaller declines in a number of other non-OPEC countries. OPEC countries currently hold 71.8% of global proved reserves.
Note: Lags in reporting official data mean that 2017 figures for many countries are not yet available.
World oil production rose by only 0.6 million b/d in 2017, below average for the second consecutive year.
Production fell in the Middle East (-250,000 b/d) and South & Central America (-240,000 Kb/d) but this was outweighed by growth from North America (820,000 b/d) and Africa (390,000 b/d).
After growing by 1.3 Mb/d in 2016, output by OPEC and other members of the Vienna group fell [0.3 Mb/d] last year as the cuts in production took effect. In contrast after falling in 2016, oil countries outside the Vienna group grew by 1.5 Mb/d, led by the US and a bounce back in Libya (which was not part of the Vienna agreement).
Oil demand grew by 1.7 Mb/d – similar to that seen in 2016 and significantly greater than the 10-year average of around 1.1 Mb/d.
Not surprisingly, oil demand in 2017 continued to be driven by oil importers benefitting from the windfall of low prices, with both Europe (0.3 Mb/d) and the US (0.2 Mb/d) posting notable increases, compared with average declines over the previous 10 years. Growth in China (0.5 Mb/d) was closer to its 10-year average. China and the US were the single largest contributors to growth.
Growth in consumer-led fuels most exposed to oil price movements – especially gasoline – slowed in 2017. In contrast, diesel demand bounced back, buoyed by the acceleration in industrial activity.
Dated Brent averaged $54 p/b, in 2017 up from $44 p/b in 2016, the first annual increase since 2012.
Prices drifted lower during the first half of 2017 as stocks remained stubbornly high. But as the OPEC and Vienna group production cuts started to bite and inventories began to fall, prices increased.
Refinery throughput growth averaged 1.6 million b/d, up from only 0.5 million b/d in 2016.
Growth was driven by China (570,000 b/d), the US (410,000 b/d) and Europe (370,000 b/d) which outweighed a decline of 280,000 b/d in South & Central America. Global refining capacity growth was 0.6 million b/d, below average for the third consecutive year, with China and India the main contributors to growth. As a result, refinery utilization rose from 82.5% to 83.7% – the highest in nine years. Utilisation in South & Central America fell to 66.1% – the lowest since 1985.
Global oil trade grew by a very strong 4.3% (or 2.8 Mb/d) in 2017, well above the 10-year average growth of 1.7% and a third consecutive above-average year.
Oil trade as a share of global consumption reached a record 68.8%. China, the world’s largest net oil importer, saw net imports rise by 11.5% (0.9 Mb/d) to reach a record 9.1 Mb/d. Russia was the largest net exporter in 2017 (8.6 Mb/d, a slight increase from 2016).