The total world demand for oil reached 85.71 million barrels per day (mbd) in 2005. The main consumers were North America that accounted for 30.6 percent (or 25.65 mbd), the Pacific and Asia, including China, that accounted for 29 percent, and Western Europe for 19.5 percent. The remaining 21 percent of the total demand came from Africa, the Middle East, countries of the former Soviet Union, and Latin America. At this point, the demand is growing most rapidly in the Pacific and Asian region (due to the resurgence of China) and in the Middle East (due to wars), whereas demand growth has slowed down in Eastern Europe (due to deindustrialization) and in Western Europe (due to conservation and the use of alternatives to fossil fuels). Thus, in 2005, world demand grew at about 2 percent over the previous year.

Meanwhile, the declared world refining capacity stood at 85 mbd in 2005. Taking into consideration the likelihood of bad weather events, additional wars, and oligopolistic shenanigans, negative supply shocks appear more likely than demand shocks. This means that by the end of 2006, there will probably be severe pressure on the price of oil, already oscillating around $65 a barrel. Read More »