The Oil Market to 2030–Implications for Investment and Policy

Oil is (an important) part of a larger global energy market, which is expected to see continued consumption growth (largely in emerging markets) and a continued shift toward natural gas and renewable forms of energy. While oil continues to lose market share, overall consumption and production are likely to continue growing— though more slowly than they have in the past due to expected policy changes aimed at slowing oil’s growth as well as the impact of higher prices seen in recent years. Consumption in OECD countries has likely peaked; the growth in global oil use will be entirely due to continued growth in emerging economies, most importantly China. Oil supply growth will be dominated by OPEC, although non-OPEC supply should continue rising modestly due to biofuels and other `unconventional’ supplies. This outlook suggests that the centers of gravity for both consumption and production will shift—to Asia for consumption and to Middle-East OPEC for production. Continued investment will be required for supply to meet expected demand growth; energy security will remain an important driver of policy (though U.S. import dependence should improve); and CO2 emissions appear likely to continue rising. Market-oriented policies can help address the twin challenges of sustain-ability and security.