{
  "title": "A \"New Normal\" for the Oil Market",
  "publication": "IMF Blog, October 27, 2016",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market",
  "canonical": "https://www.imf.org/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market",
  "overlayPath": "/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/index.md",
  "summary": "Authors: Rabah Arezki, Akito Matsumoto",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Authors: Rabah Arezki, Akito Matsumoto\n- Date: October 27, 2016\n- Core thesis: Shale oil production, slower emerging-market growth, and global efforts to cut carbon emissions have created a “new normal” implying oil prices are unlikely to return to pre-collapse highs."
    },
    {
      "heading": "The \"new\" oil supply",
      "content": "- Shale-oil production unexpectedly added 5 million barrels per day to supply, contributing to the global supply glut and to the oil price collapse that started in June 2014.\n- The price collapse led to a massive cut in oil investment, but production was slow to respond, keeping supply in excess.\n- Shale production showed resilience to lower prices, with drillers significantly cutting costs and improving efficiency, enabling major players to avoid bankruptcy.\n- Reduced investment is expected to result in lower production by non-OPEC countries in 2016, but production still exceeds consumption.\n- Many experts expect oil markets to balance in 2017, albeit with high level of inventory.\n- Uncertainties in supply include:\n  - The cost associated with extraction.\n  - Production from shale \"fracklog\"—drilled but uncompleted wells that can add to production flows in a matter of weeks, altering short-term production dynamics compared to conventional oil with long lead times.\n- OPEC countries and Russia have been increasing output, and Iran’s return to markets has added more supply.\n- Recent developments:\n  - OPEC members have recently agreed to cut production, but that agreement is yet to be finalized.\n  - Recent data suggest shale-oil production may again be more resilient than expected.\n  - Anticipation of an OPEC production cut in cooperation with other exporters has boosted prices to levels that will further stimulate output by many shale producers."
    },
    {
      "heading": "The \"new\" oil demand",
      "content": "- Falling prices spurred oil-demand growth to a record high of about 1.8 million barrels per day in 2015.\n- Demand growth is expected to slow to the trend level of 1.2 million barrels per day in 2016 and 2017.\n- Using basic estimates for demand elasticity with respect to price suggests the “price effect” accounts for a 0.8 million-barrel per day increase in demand.\n- A sizable share of oil demand growth is attributable to the price drop rather than income gains.\n- With limited scope for further declines in prices in dollar terms, future increases in oil demand will depend largely on prospects for global economic growth.\n- Demand drivers and risks:\n  - Recent years’ demand growth has been driven by China and other emerging-market and developing countries.\n  - China accounts for just 15 percent of world oil consumption, but its contribution to oil demand growth is significant because its economy is growing much faster than advanced nations.\n  - Further slowdowns in emerging and advanced economies, and structural shifts in emerging economies (notably China’s shift from an investment- and export-led growth model to a domestic-demand-led growth model), can significantly change the demand picture.\n- Medium- to long-run risks from climate policy:\n  - The transition away from oil and other fossil fuels clouds the outlook for oil demand, although lower prices may delay the transition.\n  - Energy policies will have to be altered significantly to meet the goals set at the December 2015 Paris Climate Conference (COP21), and a significant portion of oil reserves will have to remain under the ground and unburned.\n  - Lack of clarity about the specific actions needed to achieve COP21 goals adds to uncertainty about the oil-demand outlook."
    },
    {
      "heading": "Price outlook and market dynamics",
      "content": "- Futures markets point to slight gains in oil prices, but recent shifts in futures-price curves suggest prospects for higher prices have been worsening.\n- Downward revisions to global growth forecasts, especially for emerging markets, have offset supporting factors such as price-driven demand growth.\n- Turmoil in financial markets and a strong dollar have put downward pressure on oil prices.\n- Combined trends—secular drop in petroleum consumption in advanced economies, growth of shale, and slower global growth—point to a “lower for longer” scenario for oil prices.\n\nSource: A \"New Normal\" for the Oil Market — Rabah Arezki, Akito Matsumoto, October 27, 2016.\n\n---\n\n Content in this bundle\n\n- 石油市场的“新常态”; IMF博客\n  - 石油市场的“新常态”; IMF博客 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 石油市场的“新常态”; IMF博客 (PDF){rel=\"external\" type=\"application/pdf\"}\n- 原油市場の「新常態」, ラバ・アレズキ 、 松本哲人, 2016年10月27日\n  - 原油市場の「新常態」, ラバ・アレズキ 、 松本哲人, 2016年10月27日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 原油市場の「新常態」, ラバ・アレズキ 、 松本哲人, 2016年10月27日 (PDF){rel=\"external\" type=\"application/pdf\"}\n- WEOSpecialAPR15\n  - WEOSpecialAPR15 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - WEOSpecialAPR15 (PDF){rel=\"external\" type=\"application/pdf\"}\n- «Новая норма» для рынка нефти, Рабах Арезки и Акито Мацумото, 27 октября 2016 года\n  - «Новая норма» для рынка нефти, Рабах Арезки и Акито Мацумото, 27 октября 2016 года (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - «Новая норма» для рынка нефти, Рабах Арезки и Акито Мацумото, 27 октября 2016 года (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- عربي\n- historic collapse\n- https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart1.jpg\n- prospects for global economic growth\n- https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart2.jpg\n- lower prices may delay the transition\n- https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart3.jpg\n- lower prices in the past year\n\nSource: https://www.imf.org/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market"
    }
  ],
  "bullets": [
    "[Markdown version](/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/index.md)",
    "[Structured JSON version](/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/index.json)",
    "[Bundle manifest](/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/bundle-manifest.json)",
    "Authors: Rabah Arezki, Akito Matsumoto",
    "Published: October 27, 2016",
    "Authors: Rabah Arezki, Akito Matsumoto",
    "Date: October 27, 2016",
    "Core thesis: Shale oil production, slower emerging-market growth, and global efforts to cut carbon emissions have created a “new normal” implying oil prices are unlikely to return to pre-collapse highs.",
    "Shale-oil production unexpectedly added 5 million barrels per day to supply, contributing to the global supply glut and to the oil price collapse that started in June 2014.",
    "The price collapse led to a massive cut in oil investment, but production was slow to respond, keeping supply in excess.",
    "Shale production showed resilience to lower prices, with drillers significantly cutting costs and improving efficiency, enabling major players to avoid bankruptcy.",
    "Reduced investment is expected to result in lower production by non-OPEC countries in 2016, but production still exceeds consumption.",
    "Many experts expect oil markets to balance in 2017, albeit with high level of inventory.",
    "Uncertainties in supply include:",
    "OPEC countries and Russia have been increasing output, and Iran’s return to markets has added more supply.",
    "Recent developments:",
    "Falling prices spurred oil-demand growth to a record high of about 1.8 million barrels per day in 2015.",
    "Demand growth is expected to slow to the trend level of 1.2 million barrels per day in 2016 and 2017.",
    "Using basic estimates for demand elasticity with respect to price suggests the “price effect” accounts for a 0.8 million-barrel per day increase in demand.",
    "A sizable share of oil demand growth is attributable to the price drop rather than income gains.",
    "With limited scope for further declines in prices in dollar terms, future increases in oil demand will depend largely on prospects for global economic growth.",
    "Demand drivers and risks:",
    "Medium- to long-run risks from climate policy:",
    "Futures markets point to slight gains in oil prices, but recent shifts in futures-price curves suggest prospects for higher prices have been worsening.",
    "Downward revisions to global growth forecasts, especially for emerging markets, have offset supporting factors such as price-driven demand growth.",
    "Turmoil in financial markets and a strong dollar have put downward pressure on oil prices.",
    "Combined trends—secular drop in petroleum consumption in advanced economies, growth of shale, and slower global growth—point to a “lower for longer” scenario for oil prices.",
    "**石油市场的“新常态”; IMF博客**",
    "**原油市場の「新常態」, ラバ・アレズキ 、 松本哲人, 2016年10月27日**",
    "**WEOSpecialAPR15**",
    "**«Новая норма» для рынка нефти, Рабах Арезки и Акито Мацумото, 27 октября 2016 года**",
    "[عربي](http://blog-montada.imf.org/?p=4535)",
    "[historic collapse](https://blogs.imf.org/2014/12/22/seven-questions-about-the-recent-oil-price-slump/)",
    "[https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart1.jpg](https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart1.jpg)",
    "[prospects for global economic growth](http://www.imf.org/external/pubs/ft/weo/2016/02/)",
    "[https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart2.jpg](https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart2.jpg)",
    "[lower prices may delay the transition](https://blogs.imf.org/2015/12/02/the-price-of-oil-and-the-price-of-carbon/)",
    "[https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart3.jpg](https://www.imf.org/wp-content/uploads/2016/10/res-oilmarket-chart3.jpg)",
    "[lower prices in the past year](https://blogs.imf.org/2016/03/24/oil-prices-and-the-global-economy-its-complicated/)"
  ],
  "related": [
    {
      "title": "石油市场的“新常态”; IMF博客",
      "role": "document",
      "sourceUrl": "http://www.imf.org/external/chinese/np/blog/2016/102716c.pdf",
      "summary": {
        "path": "/external/chinese/np/blog/2016/102716c.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/external/chinese/np/blog/2016/102716c.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "原油市場の「新常態」, ラバ・アレズキ 、 松本哲人, 2016年10月27日",
      "role": "document",
      "sourceUrl": "http://www.imf.org/external/japanese/np/blog/2016/102716j.pdf",
      "summary": {
        "path": "/external/japanese/np/blog/2016/102716j.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/external/japanese/np/blog/2016/102716j.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "WEOSpecialAPR15",
      "role": "document",
      "sourceUrl": "http://www.imf.org/external/np/res/commod/pdf/WEOSpecialAPR15.pdf",
      "summary": {
        "path": "/external/np/res/commod/pdf/WEOSpecialAPR15.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/external/np/res/commod/pdf/WEOSpecialAPR15.pdf",
        "mime": "application/pdf"
      }
    },
    {
      "title": "«Новая норма» для рынка нефти, Рабах Арезки и Акито Мацумото, 27 октября 2016 года",
      "role": "document",
      "sourceUrl": "http://www.imf.org/external/russian/np/blog/2016/102716r.pdf",
      "summary": {
        "path": "/external/russian/np/blog/2016/102716r.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/external/russian/np/blog/2016/102716r.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/index.md",
    "json": "/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/index.json",
    "bundleManifest": "/en/blogs/articles/2016/10/27/a-new-normal-for-the-oil-market/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-08-27T22:41:50.863Z"
}