2020 oil markets: meltdown?

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.

2020 markets have a 5% chance of recovering, but otherwise will run at $20-30/bbl, after reflecting the impacts of COVID19 and the breakdown of OPEC’s output accord. This detracts 2.5Mbpd from our shale models by 2021. The market comes back into balance in 2022, yielding a gradual recovery.

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. Included with the download is a PDF summary of our latest oil price thesis, plus country-by-country notes, which inform our longer-term forecasts.