Oil Price Cycles

[dan_s]

It is really this simple: "Low oil prices increase demand and lower supply, which leads to a tight global oil market and higher oil prices."

I will be discussing this at a conference in Philadelphia on Wednesday: Actual demand for oil-based products is MUCH HIGHER than what the numbers tell us. The citizens of China and India want a higher standard of living, but most of them cannot afford gasoline. In 2024 consumptions of oil-based products per capita was 917 gallons in the U.S., 140 gallons in China and just 57 gallons in India. Most of India's citizens walk or ride a bike everywhere they go. Only a few countries in Africa consume less oil per capital than India. Oil-based fuels are "rationed by price" and they always will be.
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OPEC, together with its allies, is increasing oil production and anticipates "very strong" demand in the third quarter, with a tight supply-demand balance expected in the months ahead, the group's secretary general said, according to a Russian media report.

The eight OPEC+ members, including Russia and Saudi Arabia, agreed to increase oil production by 548,000 barrels per day in August as part of a gradual rollback of voluntary cuts. < They increased quotas, NOT PHYSICAL SUPPLY.

Five sources told Reuters that OPEC+ oil producers are set to approve another big output boost for September. < There is much less spare capacity (most of it in Saudi Arabia) than the current paradigm of most people. The general population believes that "Drill Baby Drill" can keep increasing oil production year-after-year.

Russia's RIA news agency quoted Haitham Al Ghais on Monday as telling journalists on the sidelines of last week's OPEC seminar in Vienna that the organization expected demand growth of 1.3 million barrels per day year on year in 2025 due to a strong global economy.

"And that means we are seeing, especially in the third quarter, very strong demand growth," he said, according to the report.

OPEC is doubling down on its view that global oil demand will keep rising through 2050, with no peak demand in sight, as the cartel released its annual World Oil Outlook on long-term energy trends.

The Group ticked up its forecast, projecting oil demand will reach 113.3M bbl/day in 2030 and nearly 123M bbl/day in 2050, up from 103.7M bbl/day last year, underpinned by expectations of robust population and economic growth.