The world runs on money! Or oil! Crude oil to be more specific. It is unnecessary to explain the importance of crude oil in the world. We just have to look at the news, and how countries with oil resources have become rich. The Middle East is the biggest example of this statement. The statement, “the world runs on oil” not only talks about the political influence of oil-rich economies but also in its literal sense. It is because of crude oil that most of the vehicles are running on the road and the manufacturing units all across the world are still functional. The global crude oil consumption as of 2017 stood at 3.72 trillion metric tonnes. (SpendEdge – Procurement Market Intelligence Report) Although the world is moving towards clean energy, oil is still a significant part of the global economy.
Largest consumers of crude oil
High economic growth in countries such as China, India, Singapore, and Indonesia has driven consumption and made APAC the leading market for crude oil in terms of consumption. Gasoline, kerosene, diesel fuel, and paraffin wax are amongst the major crude oil products consumed in this region. Such fuels are powering various industrial and domestic applications including automobile, chemical manufacturing, and road construction. In India, LPG consumption is very high, as it is the primary source of energy for daily cooking needs. Over the last decade, the production of natural gas in China has been shooting up; thus, driving the manufacturing of chemicals as it’s a clean fuel source. As a result, the overall demand for crude oil is expected to grow at a CAGR of 3%–4% over the forecast period
In terms of consumption, the US is the largest market for crude oil, not only in North America but also globally. The country accounts for more than 20% of the global crude oil consumption. It is no wonder that the US has either issues or diplomatic relations with many countries in the Middle East. A high number of per capita vehicle ownership and energy consumption are the significant factors driving the consumption in this market. Additionally, the discovery of shale oil in the region has resulted in an increase in domestic production volumes of crude oil, which, in turn, has led to a decline in both price and imports of crude oil.
However, the growth of the natural gas market in the region, which can be attributed to the discovery of shale gas in the region, has resulted in several chemical suppliers using natural gas as fuel and feedstock to produce chemicals such as olefins and ethylene. These factors are expected to lead to a minimal growth in demand for crude oil in the region
Europe ranks third in terms of global crude oil consumption. The strong chemical and automotive market in France, Germany, and Russia are driving the consumption in this region. The region is also the fastest growing in terms of green energy as countries such as Sweden and Denmark are focusing on clean energy. Europe is also the leading market for electric cars (sales per capita) worldwide. Moreover, governments across the region have passed legislation to reduce the consumption of crude oil by employing stringent limitations on emissions of pollutants from the use of crude oil products. Consequently, the overall market for crude oil is expected to decline over the years.
MEA is one of the largest production hubs for crude oil. The region uses crude oil to produce chemicals such as EDC, VCM, ethylene, benzene, toluene, and olefins. Apart from the Middle East, high economic growth in African countries, such as Nigeria, is leading to the higher consumption of crude oil-based fuels. The only concern for crude oil market in this region is the surrounding political instability, civil war, and financial downturn. Such events can have a negative effect on both the demand and supply of crude oil, which will hamper the market growth.
Venezuela is the country with largest oil reserve in the world, with an estimated proven oil reserve of over 250 billion barrels. In terms of consumption, it ranks third followed by Brazil and Argentina. Majority of the crude oil is used in the production of chemicals such as EDC, olefins, gasoline, diesel, and kerosene, which are then used in several end-user segments. The region, however, experiences a decline in crude oil demand due to the preference for biofuels such as ethanol.
Read more about the top consumers of crude oil with supply market insights, procurement challenges, pricing insights, and technological advancements in SpendEdge’s upcoming report on the global crude oil market.