We expect the current economic downturn to revert to the long-term trend of two-and-half to four percent growth. We expect demand to increase in parallel with a recovery in the global economy. Such growth will mainly be seen in emerging markets, as environmental policies and low population growth will constrain oil demand in mature economies.

In the medium to long term, we see growth limitations in global oil supply capacity. Oil production outside OPEC countries has already showed signs of flattening out, mainly due to the natural decline in output from mature oilfields. Supply growth will mainly come from OPEC countries in the future. In the longer term, we also expect limitations on OPEC production. Due to lack of investment capacity and policies aimed at making the period of stable oil revenues last as long as possible. In this context, we see incentives to develop both unconventional oil resources and alternative sources of oil products. There is a need to develop technologies to achieve this in a more environmentally acceptable way.

In the longer term, oil demand will therefore be limited by supply capacity. The supply side will also entail limitations on refinery capacity. A number of refineries are currently under planning and construction around the world, and, despite some delays due to the economic downturn, refinery capacity is expected to be more than sufficient in the years ahead. However, with higher prices and limited supply, we expect oil to continue its trend towards becoming primarily a fuel source for transport, such as gasoline, jet fuel and diesel, and less of a source for energy for stationary use, such as heating. This will put further pressure on refineries to increase the yield of these desired products. Income from refining will therefore mainly come from the upgrading of heavy oil components into transportation fuel products.

In developed economies, the legislative drive to remove sulphur and other pollutants from oil products is coming to an end now that the goals have been achieved, and future regulations are expected to focus on biofuel or other renewable content. However, an issue remains as to whether new regulation will seek to migrate shipping away from using heavy fuel oil to using diesel, in order to cut emissions. That could put increased pressure on a diesel market that already looks tight due to a lack of sufficient diesel upgrading capacity.