How Japan Just Made The Global Oil Crunch Worse

The latest monthly oil forecast from the IEA is out today, and obviously it’s the first to take into account the impact of the Japanese earthquake and ensuring nuclear crisis.

As it turns out, the situation will end up adding to global demand.

Forecast global oil product demand remains largely unchanged for both 2010 and 2011. A revision to 
OECD demand, in anticipation of higher Japanese oil use for power generation and reconstruction 
following the March earthquake/tsunami, has broadly offset downward adjustments to non‐OECD 
demand. Global oil demand, which averaged 87.9 mb/d in 2010 (+3.4% or +2.9 mb/d year‐on‐year), is 
still  seen  rising  to  89.4 mb/d  in  2011  (+1.6%  or  +1.4 mb/d  year‐on‐year).  However,  preliminary 
January and February data suggest that persistently high oil prices may have already started to dent 
demand growth. 

 Projected OECD oil demand, unchanged for 2010, has been revised up by 90 kb/d for 2011, largely 
on a reappraisal of Japanese demand for gasoil, residual fuel oil and low‐sulphur crude. Total OECD 
demand, which stood at 46.1 mb/d in 2010 (+1.5% or +0.7 mb/d year‐on‐year), is forecast to remain 
at a similar level in 2011. Japan’s year‐on‐year oil demand growth, now seen at 30 kb/d (versus a 
contraction of 120 kb/d previously), is thus expected to effectively offset a decline in Europe.  

Here’s a look at demand growth by region:

chart

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