2020 Oil Markets: Bounding the Uncertainty

Our oil model projects 45 supply-demand lines, month-by-month out to 2025. In our base case scenario, we think an oil price downturn is needed in 2020, to alleviate an emerging overhang that stretches out to 2025 (chart below).

However, after ten years forecasting oil markets, our top conclusion is that all oil models are wrong. Some are nevertheless useful. To be most useful, our model takes a Monte Carlo approach to the key uncertainties…

The statistical expectation points to over-supply in 2020, even with 1.3Mbpd of demand growth, Saudi flat-lining its own output at 9.5Mbpd and further declines in Iran and Venezuela. On our assessment of probabilities, there is only a c22% chance that Saudi will be able to raise production without taking the oil market into over-supply.

Please download our full model to see, and to flex all our input assumptions.

Included with this download are our country-by-country notes, which inform the longer-term forecasts.