Macro Trends Ann-Louise Hittle, CSIS, 21 February 2019
Trusted Intelligence
woodmac.com
The global economy is slowing North America and Europe lead the slowdown Global GDP growth (annual) 5.0%
Base case forecast
4.0%
3.1% 3.0% 2.7%
3.0%
2.5% 2.4%
2.0% 1.0% 0.0% -1.0% Other
-2.0%
Commodity producers
China
Europe
USA
World
-3.0% 2005
2006
Source: Wood Mackenzie
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Governments have limited firepower to fight a recession Public debts are higher than a decade ago and monetary policy remains relatively loose Government debt as share of GDP
Official interest rates 14
100
12
80
10 8
60
%
%
120
6 40 4 20
2
0 1995
2000
US China
2005 2010 2015 Eurozone UK India
Source: Wood Mackenzie, Thomson Reuters Datastream
0 1995
2000 2005 UK Eurozone
2010 China
2015 US
Will rising protectionism trigger the next recession? China cannot match the scale of tariffs threatened by the US US-China tariff war: one-sided
China exchange rate 7.0
500 Not yet subject to tariffs 400 Subject to tariffs 300 200
RMB per USD
Import value, USD billion
600
6.5
6.0
100 5.5
0 USA imports from China
China imports from USA
Source: Wood Mackenzie, Thomson Reuters Datastream
2013
2014
2015
2016
2017
2018
Volatile geopolitical dynamics add to global supply uncertainty Beyond Iran and Venezuela, the outlook for countries like Libya, Nigeria and Iraq will also be heavily dependent on political stability US exit from the Iran nuclear deal introduces risk to Iran supply.
Iraq: Long-term supply depends on political stability.
Russia: we assume current sanctions become the “new norm”. Will Russia remain in OPEC+ pact?
Iran: Reduced near-term oil exports. Longer-term, risk to Iran’s oil capacity growth. Libya: Need unity government and stability for capacity growth.
Venezuela: US oil sanctions hit production hard. Will Maduro exit?
Source: Wood Mackenzie
Saudi Arabia/ Iran: Tensions in region as vie for influence. Saudi Arabia is key to OPEC+ deals.
Nigeria: constant risk of bunkering and sabotage.
Global oil demand hits plateau and then declines slightly in mid-2030s
Global oil demand 125
Global oil demand by product 40
2000-2017 trend
120
Gasoline Jet * Naphtha
35
115
Diesel/GO Fuel Oil LPG/ethane
30
105
Million b/d
Million b/d
110
100 95 90
25 20 15 10
85 80
5
75
0 2000 2005 2010 2015 2020 2025 2030 2035 2040
2000 2005 2010 2015 2020 2025 2030 2035 2040 Global sulphur limit for marine fuels drops from 3.5% to 0.5% in 2020, resulting in falling demand for High Sulphur Fuel Oil (HSFO) *
Source: Wood Mackenzie
Source: Wood Mackenzie
US Lower 48 onshore crude oil rises to a peak of 12 million b/d by 2025 US Lower 48 crude and condensate production Reserves Growth
Crude oil and field condensate production (million b/d)
14 12 10 8 6 4 2 0
Source: Wood Mackenzie
Bakken
Eagle Ford
Niobrara
Permian
SCOOP-STACK-Cana
Other
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