Oil consumption grew by 0.9 million barrel per day (b/d), or 0.9% slightly lower than the 10-year average of 1.3%. Growth was led by China, where demand rose by 680,000 b/d, the largest increase in the country’s demand since 2015. Elsewhere in the developing world, growth was below-average, with Iran (180,000 b/d or 10%) the only major exception. OECD demand fell by 290,000 b/d, the first decline since 2014.
By product, consumption growth was led by ethane and LPG (380,000 b/d), helped by the substitution of naphtha in petrochemicals, with naphtha demand down slightly (-15,000 b/d). Diesel grew a little above average (360,000 b/d) as preparations for the International Maritime Organisation’s bunker fuel sulphur specification in 2020 lifted marine diesel demand. In contrast, this shift reduced demand for high sulphur fuel oil, contributing to a 320,000 b/d decline in fuel oil consumption.
Oil production fell slightly by 60,000 b/d in 2019 as strong non-OPEC production growth, led by the US, was offset by a sharp decline in OPEC production.
The US posted the largest increase of any country for the third consecutive year, with its output rising by a massive 1.7 million b/d, although this was down from the record increase in 2018 (2.2 million b/d). There was also significant growth from Brazil (200,000 b/d) and Canada (150,000 b/d), although in the latter’s case, this was a pronounced slowdown in growth compared to 2017 and 2018.
OPEC production fell by 2 million b/d, the group’s steepest decline since 2009. Much of this decline was driven by a combination of sanctions and economic difficulties in Iran (-1.3 million b/d) and Venezuela (-560,000 b/d). In addition, a renewed OPEC+ production cut agreement reduced other countries’ output levels, with Saudi Arabia’s production falling (430,000 b/d). Despite this agreement, the production of some OPEC members increased, notably Iraq and Nigeria which increased their production by 150,000 and 100,000 b/d respectively.
Looking at oil production by type, declines were concentrated in crude oil and condensate, which together fell by 580,000 b/d. Natural gas liquids (NGLs) continued to grow robustly, by 520,000 b/d (4.5%), in-line with its long-run trend. As has been the case in the last few years, NGLs output growth was driven primarily by the US (440,000 b/d), which has doubled its production between 2012 and 2019 to 4.8 million b/d.
Global proved oil reserves were 1734 billion barrels at the end of 2019, down 2 billion barrels versus 2018. The global R/P ratio shows that oil reserves in 2019 accounted for 50 years of current production. Regionally, South & Central America has the highest R/P ratio (144 years) while Europe has the lowest (12 years). OPEC holds 70.1% of global reserves. The top countries in terms of reserves are Venezuela (17.5% of global reserves), closely followed by Saudi Arabia (17.2%) and Canada (9.8%).
Refinery throughput barely grew at the global level (30,000 b/d), held back by a slowing in oil consumption growth and robust growth in NGLs supplies. China was again the exception, with its crude runs growing by a record high of 950,000 b/d as new refineries ramped up. Throughput declined in most other regions, in particularly the US (-400,000 b/d) and South & Central America (-300,000 b/d), with the latter region posting its sixth consecutive annual decline.
Refining capacity rose by 1.5 million b/d, the largest increase since 2009. Growth was driven by additions in China (540,000 b/d) the Middle East (310,000 b/d) and the US (210,000 b/d) as well as by a record low level of refinery closures. Global refinery utilisation fell sharply, dropping by 1.2 percentage points to 82.5%, the largest annual decline since 2009.
Refining margins were slightly lower, with the average of the three region margins tracked in this book (US Gulf Coast, Northwest Europe and Singapore) falling from $5.4/bbl in 2018 to $4.7/bbl.
Oil trade fell by 230,000 b/d (0.3%) - the first decline since the financial crisis in 2009. Most of this decline was concentrated in crude oil trade: a sharp fall in Middle East crude exports (-1.4 million b/d), mainly due to Iranian sanctions, was only partially offset by continued growth in US crude exports (0.9 million b/d), while falling US crude imports (-1 million b/d) broadly offset strong growth in Chinese purchases (0.9 million b/d). Overall, net oil imports into the US (including products) fell by 1.8 million b/d to only 1.1 million b/d, down from net imports of 9.5 million b/d ten years earlier.