Everyone knows the commodities supercycle is coming to an end as a result of slowing demand in China.
In a new note, Deutsche Bank’s Taimur Baig and Jun Ma zero in specifically on the implications for declining global oil demand.
We just saw its (declining) prospects in BP’s statistical energy review last week.
Baig and Ma say global oil supply is likely to outstrip global demand for the rest of the decade, thanks to the U.S. shale boom — which is also poised to go global (China has some of the world’s largest shale deposits) — and refining capacity that’s about to come online.
As a result, oil prices are going to be severely dampened in the years to come. Here’s their projection:
Deutsche BankThis could have profound effects in the Middle East, as we’ve previously suggested:
If the US oil production surplus, for instance, ultimately leads to the Brent benchmark falling precipitously with WTI to a level below the fiscal and budgetary level for key oil producers in the Middle East, the economic strain could ultimately lead to potentially widespread social unrest in that region.
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