OIL MARKETS


Figure 5: Oil Burden: A Useful Indicator


2% 4% 6% 8% 10%


-6% -4% -2% 0


Oil Demand Growth Oil Burden 2011 Oil Burden = 4.5% Brent 2011 Price YTD = US$111.85/bbl


Global GDP Growth


Sources: BP, IMF, Morgan Stanley Commodity Research


particularly in the OECD, though demand in the EM remained above water – suggesting that, had the economy not been plagued by the great financial crises, oil prices may not have tumbled as they did.


... we would characterise the last 2-3 years as an “oil-less” recovery in the OECD


Today, with oil prices having averaged just over $110/bbl YTD


(Brent), the oil burden is averaging around 4.5%. Demand in the OECD is weakening, but again, emerging market growth fuelled by rising income is more than offsetting. Despite the rising oil burden, rationing OECD demand may


prove increasingly challenging. We believe the OECD’s potential to ration demand in the near term is more limited than during 2008. Total OECD oil demand fell by 7.5% in aggregate between 2007 and 2009. Despite the rebound in economic activity since then, OECD demand remains depressed. In other words, we would characterise the last 2-3 years as an “oil-less” recovery in the OECD.


Figure 6: ‘Oil Less’ Recovery in the OECD


50 49 48 47 46 45 44 43


OECD GDP US$ Trillion (RHS) OECD Demand, mmb/d (LHS)


46 44 42 40 38 36 34 32 30


2005 2006 2007 2008 2009 2010


Note: 2011 figures are IEA and IMF estimates Sources: IMF, IEA, Morgan Stanley Commodity Research


September 2011 39 2011e


1966 1971 1976 1981 1986 1991 1996 2001 2006 2010e

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