‹ Analysis & Projections

Annual Energy Outlook 2015

Release Date: April 14, 2015   |  Next Release Date: March 2016 |  correction  |  full report

Market Trends: International Energy

Range of oil price cases represents uncertainty in world oil markets

In AEO2014 the North Sea Brent crude oil price is tracked as the main benchmark for world oil prices. In 2013, the West Texas Intermediate (WTI) crude oil price continued to trade at a discount relative to other world oil prices. With refineries running at high levels through August 2013, the discount narrowed as a result of new oil transportation infrastructure from the market center for WTI prices in Cushing, Oklahoma. The discount widened from September to December 2013, however, as lower 48 production continued to grow and refinery utilization returned to lower levels after the summer.

EIA developed three oil price cases—Reference, High, and Low—to examine how alternative price paths could affect energy markets (Figure MT-4). The AEO2014 price cases included varying assumptions about: (1) investment and production decisions by the Organization of the Petroleum Exporting Countries (OPEC), (2) development of tight oil and bitumen resources in non-OPEC countries (including the United States), and (3) demand growth in China, the Middle East, and other
countries outside the Organization for Economic Cooperation and Development (non-OECD countries).

figure data

Relative to the Reference case, the Low Oil Price case assumes lower economic growth and thus lower liquids demand from non-OECD regions; and rising production from OPEC countries, which displaces relatively more expensive crude oil from non-OPEC producers. In the Low Oil Price case, OPEC supplies 51%
of the world’s liquid fuels in 2040, compared with 44% in the Reference case. In the High Oil Price case, assuming stronger demand growth and fewer resources developed in OPEC countries, the non-OECD countries account for 62% of world liquids use in 2040, compared with 60% in the Reference case and 57% in the Low Oil Price case. The OPEC share of world liquids production never exceeds 40% in the High Oil Price case.

Trends in petroleum and other liquids markets are defined largely by the developing nations

In the AEO2014 Reference, High Oil Price, and Low Oil Price cases, total world consumption of petroleum and other liquids in 2040 ranges from 117 to 121 million barrels per day (MMbbl/d) (Figure MT-5). The alternative oil price cases reflect shifts in both supply and demand. Although demand at the margin in the Organization for Economic Cooperation and Development (OECD) countries is influenced primarily by price, demand in non-OECD regions is driven primarily by rates of economic growth that are particularly uncertain. The AEO2014 High Oil Price case reflects a scenario in which strong economic growth in the emerging non-OECD nations increases the growth of their liquids demand and drives oil prices higher.

figure data

OECD petroleum and other liquids use grows in the Reference case to 47 MMbbl/d in 2040, while non-OECD use grows to 70 MMbbl/d. In the High Oil Price case, OECD petroleum and other liquids use in 2040 is lower than in the Reference case, at 45 MMbbl/d, but demand in the fast-growing non-OECD economies rises to 73 MMbbl/d. In the Low Oil Price case, OECD consumption grows to 51 MMbbl/d in 2040, and lower GDP growth in the non-OECD countries leads to slower growth in liquids demand, which reaches only 69 MMbbl/d in 2040. Non-OECD liquids demand would be even lower than projected in the Low Oil Price case, but low oil prices encourage more use of liquid fuels in the non-OECD nations in the long term.

The supply response also varies across the price cases. In the Low Oil Price case, OPEC’s ability to manage its market share is weakened. Low prices have a negative impact on non-OPEC petroleum supply in comparison with the Reference case. In the High Oil Price case, OPEC restricts production, non-OPEC petroleum resources become more economical, and high oil prices make production of nonpetroleum liquids more economically attractive.

World production of liquid fuels from biomass, coal, and natural gas increases

Nonpetroleum liquids are a small but increasing source of total liquids supply in the AEO2014 Reference case. World production of nonpetroleum liquids—including biofuels, coal-to-liquids (CTL), and gas-to-liquids (GTL)—totaled 1.7 MMbbl/d, or 1.9% of total world liquids production, in 2012. In 2040, nonpetroleum liquids production, at 4.0 MMbbl/d, accounts for 3.4% of total world liquids production (Figure MT-6).

figure data

While world production of nonpetroleum liquids is spurred by sustained high prices, high prices alone are not expected to be sufficient to increase U.S. production of nonpetroleum liquids. As a result, no U.S. production of CTL or GTL is projected in the AEO2014 Reference case. U.S. biofuels production does grow in the projection, but only modestly, from 0.9 MMbbl/d in 2012 to 1.1 MMbbl/d in 2040.

The U.S. share of world biofuels production shrinks in the AEO2014 Reference case from 66% in 2012 to 43% in 2040. Biofuels development relies heavily on country-specific programs or mandates and outlooks for transportation fuels. U.S. demand for transportation fuels declines, and without significant additional market penetration of fuels with high-percentage ethanol blends or of drop-in fuels, the possibilities for expanded biofuel production are limited.

Biofuels production accounts for the largest share of total world nonpetroleum liquids production throughout the projection, although its share falls to 63% in 2040 from 79% in 2012. In 2040, world biofuels production of 2.5 MMbbl/d is 68% larger than world production of CTL and GTL combined.


  1. The industrial sector includes manufacturing, agriculture, construction, and mining. The energy-intensive manufacturing sectors include food, paper, bulk chemicals, petroleum refining, glass, cement, steel, and aluminum.
  2. Value of shipments includes both final and intermediate products.