Global oil demand is currently projected to expand by a steady 1.5% in 2018 to reach 99.0m bpd, a slight slowdown from estimates of 1.7% in 2017. The key factor expected to dampen the rate of global demand growth this year, despite a backdrop of expectations for stronger global economic growth, is a generally firmer oil price environment relative to 2017. The sustained relatively elevated level of oil prices so far in 2018 has exceeded initial expectations, with global crude benchmarks on average around a third higher in the first five months of the year than in the same period the preceding year, and average prices in May up by over 50% y-o-y. The hampering effect is expected to be felt in non-OECD economies in particular, partly due to the scaling back or removal of fuel subsidies by a number of nations following the recent oil price crash. Despite relatively firm growth in demand across many non-OECD countries in Q1 2018, as higher oil prices translate into higher outlays for end-users it is expected that they will begin to take their toll on oil consumption growth in Q2 2018 and continue in the rest of the year. Meanwhile, the increase in trade tensions at the start of June has raised concerns over their possible escalation into a wider 'trade war' which could have broader economic implications, potentially affecting oil consumption.
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