EIA lowers global oil consumption projections

EIA expects that OPEC members will continue to produce about 30 million bbl/d of crude oil over the next two years to accommodate the projected increase in world oil consumption and to counterbalance supply disruptions. Projected OPEC crude oil production increases by about 0.8 million bbl/d in 2012, and then falls by 0.9 million bbl/d in 2013, as non-OPEC supply growth increases and stocks rise slightly. OPEC non-crude oil liquids (condensates, natural gas liquids, and gas-to-liquids), which are not covered by OPEC's production quotas, averaged 5.5 million bbl/d in 2011 and are forecast to increase by 0.3 million bbl/d in 2012 and less than 0.1 million bbl/d in 2013.

EIA expects Iran's crude oil production to fall by about 1 million bbl/d by the end of 2012 relative to an estimated output level of 3.6 million bbl/d at the end of 2011, and by an additional 200 thousand bbl/d in 2013. Iran's output decline has continued to accelerate since the fourth quarter of 2011. EIA believes that this acceleration reflects erosion in Iran's crude oil production capacity due to the country's inability to carry out investment projects that are necessary to offset the natural decline in production from existing wells, as well as the impact of lower Iranian crude oil exports due to recently enforced EU and U.S. sanctions. A number of foreign companies that were investing in Iran's upstream have halted their activities as a result of previous U.S. sanctions, which have been compounded by tighter measures enforced since the start of this year that have made it increasingly difficult to do business with the country. EIA expects that the forecast decline in Iran's output will be offset by increased production from other OPEC member countries.

EIA estimates that OECD commercial oil inventories ended 2011 at 2.59 billion barrels, equivalent to 55.9 days of forward-cover (Days of Supply of OECD Commercial Stocks Chart). Projected OECD oil inventories increase to 2.63 billion barrels and 57.3 days of forward-cover by the end of 2012, which is among the highest end-of-year levels in the last decade, because of the decline in OECD consumption.

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