Long-Term Oil Model: Predicting Oil Supply and Demand

BCG’s long-term oil model is a sophisticated digital tool for modeling global oil supply and demand in an era of unpredictability.

The energy industry is undergoing a dramatic transition as the focus on energy efficiency intensifies and competition among different fuel types escalates. The rapid pace of change has clouded the outlook for oil supply and demand—creating challenges for companies across a wide range of sectors. Upstream oil producers, refiners, energy-trading companies, and petrochemical manufacturers, as well as shipping and aviation companies, need to understand and plan for a variety of divergent oil market scenarios in the years ahead.

BCG’s long-term oil model can help companies confront and manage the uncertainty of oil supply and demand. The tool is based on a bottom-up perspective of both supply and demand. Supply is modeled according to 47 categories of upstream assets, including Arctic, deep water, OPEC, and shale. Demand is modeled across three categories: use (for example transportation and production), fuel type (including gasoline or heavy fuel oil), and geography.

Based on the data for both supply and demand, BCG can help clients model a wide range of scenarios through 2035 and make critical decisions related to:

  • Portfolio optimization strategies
  • Profit pool analysis
  • Strategies based on dynamics of oil supply and demand

The long-term oil model provides a wealth of information and insight to any company with a stake in the oil market. On the demand side, it offers five-year oil demand curves from 2015 through 2019 to 2035 through 2039, oil demand elasticities, and drivers and inhibitors for oil demand growth between 2015 and 2040. On the supply side, it offers five-year oil supply curves from 2015 through 2019 to 2030 through 2034, marginal volumes and segmentation of marginal supply by asset categories, profitability analysis by asset categories, and oil supply growth on the basis of projected asset category profitability for five-year cycles.