Oil markets: the next up-cycle?

Our oil price outlook is informed by a 45-line supply-demand model, running month-by-month out to 2025. This download contains both the model, and a 4-page summary of our outlook.

Oil prices could rebound sharply to the upside in the aftermath of the COVID crisis, as 7.5Mbpd of supply growth has been lost or deferred. The result is steep undersupply in 2021-23 and unprecedently low inventories across the mid-2020s; or in other words, the next industry up-cycle.

After ten years forecasting oil markets, our humble 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, to quantify the “risk” of positive and negative surprises (illustrative example below).

Please download the model to see, and to flex our input assumptions. Usually included with the download is a PDF summary of our latest oil price thesis, but our latest instalment has been superseded by our deep-dive note into the future of oil demand linked here.