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Reviewing 2016 World Oil Demand – March 2017

Source: OPEC 3/20/2017, Location: Europe

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As the initial outlook of the OPEC Secretariat forecast in July 2015, world oil demand growth in 2016 stood at 1.38 mb/d, although there have been significant adjustments in regional growth data. The improvement in the direction of the overall global economy and the low oil price environment supported upward revisions to OECD oil demand, particularly in Europe and Asia Pacific. These revisions were, however, offset by sluggish demand in the principal non-OECD hubs, such as Latin America and the Middle East, as a result of weaker economic growth, fuel substitution and partial subsidy removals on oil products usage. Growth in non-OECD Asian oil demand, notably India and China remain robust and above the historical average. From a global perspective, oil usage in the road transportation and petrochemical sectors dominated the overall gains. Gasoline, automotive diesel, as well as LPG and naphtha requirements, lead the growth, despite diverse regional patterns. Growth was roughly equally distributed between 1Q16, 2Q16 and 4Q16 at around 1.4 mb/d, while it was lower at 1.1 mb/d during the 3Q16.

In OECD, oil demand in Americas and Europe grew solidly, driven mainly by a strong road transportation sector and implying stronger gasoline requirements in Americas and stronger automotive diesel in Europe. Strong oil demand growth in Europe, in particular, surprisingly came up for a second consecutive year, despite high taxation relating to oil usage and a weak historical baseline, the continuing low oil price environment and improving economic conditions across the region. In Asia Pacific, the flourishing petrochemical industry, notably in South Korea, pushed 2016 oil requirement levels slightly higher than 2016 for the first time since 2012.

In the non-OECD, oil demand growth has been dominated by Other Asia and China, while oil demand declined in Latin America and the Middle East. In China and Other Asia, India took a great share of oil demand growth, with the usage of lighter petroleum products – such as gasoline, LPG and naphtha – in the transportation and petrochemical sectors accounted for the bulk of gains. Fuel substitution and the partial removal of subsidies in the Middle East lead to the largest up-to-date y-o-y decline in oil demand and the first since 1963. Sluggish direct crude burning, in addition to weaker gasoline and diesel oil demand growth, were the main characteristics for 2016. Economic concerns in key Latin American oil consuming countries coexisted with y-o-y oil demand contractions in the region for the second year in a row, with declining oil usage in all main economic sectors, especially in industrial transportation.

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