term trends shaping the oil market. Rather than being a commodity in decline, as some would like to portray, supply and demand patterns indicate that the long-term fundamentals of the oil complex remain robust. One fundamental flaw in the current narrative is the tendency to compare the current price fall with that of the mid 1980s. But this comparison is simply misguided. Market conditions now are fundamentally different from what they were then. In 1985, global oil consumption stood at just over 59 million b/d and the available spare capacity was at a historical level of over 10 million b/d, and a ratio of spare capacity to global oil consumption was about 17% per cent. In 2015, oil consumption is estimated to reach 94 million b/d, while usable spare capacity, mainly held in Saudi Arabia, is estimated at 2 million b/d - in other words, a ratio of spare capacity to oil consumption of about 2 per cent. This is one of the few industries in the world that is operating at such a thin cushion. Spare capacity acts as an insurance policy against unanticipated changes in oil market conditions and is key to maintaining oil price and global economic stability. There is another fundamental difference from the mid 1980s. Despite all the macroeconomic uncertainties engulfing the global economy, oil demand continues to grow at a robust pace and set to increase by 1.5 million b/d in 2015, the strongest growth seen in the past few years. This is in contrast to the early 1980s where global oil consumption fell between 1980 and 1984 by more than 2.3 million b/d. There may be some bumps on the road, and the phenomenal growth seen in the last three decades in Asia may not be repeated, as growth in oil demand will be moderated by efforts to efficiency enhancement and oil substitution. But the petroleum industry should not lose sight of the fact that scale matters. Globalization, industrialization, urbanization, and rapid development - all fuelled by energy - will continue to lift hundreds of millions of people out of poverty and to expand the size of the middle class from the current level of 1.8 billion to 3.2 billion in 2020, and to 4.9 billion in 2030, with the bulk of this expansion occurring in Asia. The new emerging middle class will be made up of people who are younger, and eager to increase their consumption. Such young demographics amidst rising income levels will keep energy demand on an upward trend. --More 11:50 LOCAL TIME 08:50 GMT تغريد
