Global oil demand experienced healthier than expected growth in 2018, increasing by 1.47 mb/d (Graph 1) compared to an initial expectation of 1.26 mb/d. The largest contributors to this growth are OECD Americas, with the US being the main contributor, followed by China and India. For the year, total oil consumption averaged around 98.76 mb/d.
From a regional perspective, the OECD experienced a solid increase, supported by strong demand from OECD Americas, particularly the US. OECD Americas was the largest contributor to the overall growth in world oil demand in 2018, amid firm macroeconomic indicators and a prosperous petrochemical sector. Growth was particularly strong for NGL/LPG, diesel fuel and jet kerosene.
In OECD Europe, oil demand remained in positive territory for the fourth-consecutive year as oil requirements increased in 2018 albeit at much slower pace than in previous years. OECD Asia Pacific registered solid gains in 1H18, stimulated by stable oil requirements from South Korea and Australia. Demand growth eased substantially thereafter, particularly in South Korea and from lower petrochemical feedstock demand, largely amid heavy maintenance activities. As a result, oil demand growth in OECD Asia Pacific declined y-o-y in 2018.
In the non-OECD, Other Asia enjoyed robust oil demand growth last year, following strong requirements in India, Indonesia, Singapore and Thailand. Oil demand in India recorded notable gains, supported by robust economic activities, and solid sales for both passenger and commercial vehicles, as well as government expansion projects, particularly in road construction. Oil demand in China remained firm, despite signs of a slowdown in 4Q18, as overall economic momentum eased and amid a steep decline in vehicle sales. In the Middle East, economic transformation policies, including subsidy reductions and an increase in tariffs, pushed oil demand growth into negative territory for the first time since 1989. Similarly, in Latin America, oil demand growth was lower than expected amid economic turmoil in Argentina and Brazil. For 2019, global oil demand is foreseen increasing by around 1.24 mb/d to average 100.00 mb/d, reaching the 100 mb/d threshold for the first time on an annual basis.
In the OECD, oil demand is projected to grow by 0.24 mb/d, with the OECD Americas being firmly positive, driven by solid NGL/LPG and middle distillate requirements. Oil demand in OECD Europe is projected to continue to decelerate in line with economic uncertainties. Oil consumption in OECD Asia-Pacific is also anticipated to weaken in light of planned substitution programmes. In the non-OECD, oil demand is expected to grow by around 1.00 mb/d. Lower Chinese oil demand growth is expected to be offset by higher oil requirements in the Middle East and Latin America.On the products side, the focus will be on light and middle distillates to fuel the growing petrochemical sector and support industrial activities, followed by gasoline, which will be driven by rising global vehicle sales.
Over the past two years, global oil demand has turned out to be higher than expected, supported by healthy economic activities, particularly in the OECD. With economic momentum expected to slow in the current year (Graph 2), this makes economic developments in the major consuming nations a key factor to monitor going forward. Further uncertainties impacting oil demand growth this year are seen to be trade concerns, the strength of substitution with natural gas and other fuels, the effect of commissioning/delays/closure of petrochemical projects, and the implementation of subsidy and energy efficiency programmes, particularly in the transportation sector.