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Crude oil: Key stats - Views on News from Equitymaster
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  • Apr 28, 2003

    Crude oil: Key stats

    If one were to rank uncertainties that were daunting the world economy in the recent past, the upsurge in crude prices would rank among the top three. The spurt in crude prices was not only a factor of the US led war on Iraq but also due to Venezuelan strike and disruption in Nigeria. Compared to around US$ 25 per barrel, prices crossed the US$ 32 mark during the Iraq imbroglio. Given this backdrop, we analyse the major crude producing and consuming countries.

    First of all, both crude production and consumption have grown at a CAGR of 1.2% each over the last twenty years (i.e. FY81-FY01). If one were to look at the top consumption countries in the same period, India and the Asia Pacific region have outpaced the rest by some margin. As a continent with most of the fastest growing countries like India, this does not surprise many. On the production front, Europe and South & Central America have also managed to increase crude output consistently. Despite this, the dependence on Middle East for crude is still on the higher side. Middle East accounted for 30% of the world crude output in FY01 as compared to 27% in FY81.

    Crude output trend
    Region At end 1981 At end 1991 At end 2001 CAGR (%)*
      output % output % output %  
    North America 14,344 24.1% 14,182 21.8% 14,040 18.8% -0.1%
    S. & Cent. America 3,725 6.3% 4,749 7.3% 7,001 9.4% 3.4%
    Europe 3,106 5.2% 4,718 7.2% 6,808 9.1% 4.2%
    Former Soviet Union 12,260 20.6% 10,472 16.1% 8,652 11.6% -1.8%
    Middle East 16,195 27.2% 17,280 26.5% 22,233 29.8% 1.7%
    Africa 4,981 8.4% 6,810 10.5% 7,814 10.5% 2.4%
    Asia Pacific 4,904 8.2% 6,933 10.6% 7,943 10.7% 2.6%
    TOTAL WORLD 59,516 100.0% 65,144 100.0% 74,493 100.0% 1.2%
    India 309 0.5% 703 1.1% 782 1.0% 5.0%
    Source: British Petroleum *FY01 upon FY81

    It can be observed from the following tables that Middle East, Former Soviet Union, Africa and South and Central America are the major export continents of crude oil. Together, these four majors produce about 60% of the total crude, while they account for only about 20% of total consumption. On the other side, we have North America, Asia Pacific and Europe as the major importing continents (they consume about 80% of total crude).

    Crude consumption trend
    Region At end 1981 At end 1991 At end 2001 CAGR (%)*
      consumption % consumption % consumption %  
    North America 18,989 31.8% 19,908 30.0% 23,386 31.1% 1.1%
    S. & Cent. America 3,283 5.5% 3,596 5.4% 4,693 6.2% 1.9%
    Europe 14,907 24.9% 14,976 22.6% 16,093 21.4% 0.4%
    Former Soviet Union 8,600 14.4% 7,980 12.0% 3,407 4.5% -4.8%
    Middle East 2,206 3.7% 3,497 5.3% 4,306 5.7% 3.6%
    Africa 1,480 2.5% 1,994 3.0% 2,490 3.3% 2.8%
    Asia Pacific 10,338 17.3% 14,379 21.7% 20,916 27.8% 3.8%
    TOTAL WORLD 59,803 100.0% 66,331 100.0% 75,291 100.0% 1.2%
    India 696 1.2% 1,233 1.9% 2,072 2.8% 5.9%
    Source: British Petroleum *FY01 upon FY81

    In case of North America, while the production has declined from 1981, the consumption has increased at a CAGR of 1.1%. The dependency on imports has increased over a period of time. When one considers the fact that total number of cars sold in the US is estimated at 16 m units per annum, one will not be surprised if the trend continues. As a result, any demand variations in the US tend to have an impact on prices.

    Apart from the US, Asia Pacific is one of the major crude importing countries. It imports about 62% of its crude requirements (28% of total global supply) and hence is impacted by the crude oil price movements to a major extent.

    Coming to India, the crude production has remained stagnant for the last five years whereas the consumption has increased leading to higher imports (as against 65% of consumption in FY81, it has increased to about 70% currently). If we consider the production v/s consumption of India, then we find that India produces only 1% of the total production of crude world over, whereas it consumes about 3% of the total consumption. But the government's thrust on exploration is expected to benefit the country in the long run. But in the foreseeable future, the country will continue to be exposed to the global upheavals in the oil markets.



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