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Oil and Refined Products Models


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World Oil Model

Deloitte MarketPoint’s World Oil Model is based on an analysis of the fundamental supply-demand economics that shape the world oil markets. It evolved from regional oil models originally researched in the late 1980s. These models have been expanded and linked together to form an integrated model of the world petroleum markets using MarketBuilder.

Representation of MarketBuilder's World Oil/Refining Model

Figure 1 – The World Oil Model is constructed from an integrated model of world petroleum markets.

The World Oil model helps companies forecast future oil price, volume, and reserve additions over a 40-year forward time horizon. The important factors that drive the model are supply and production cost, reserves-to-production ratios, producer discount rates, market power by individual and collective members of OPEC, gross consumption by region throughout the world, substitution and demand elasticity, overall levels of demand and economic growth, and taxation differences among producing regions.

These component models have a long history of being used to help inform energy companies when making key decisions. In that time, the crude oil market has changed substantially. However, one thing has stayed the same. Fundamental economic factors continue to drive development of new petroleum supplies, consumer demand, and prices. The World Oil Model represents the world oil market as a complex interconnected network of supply, transportation, demand, and refining. It takes into account fundamental effects of supply and demand:

  • Supply: Supply curves by basin worldwide for proved reserves, conventional oil, enhanced oil recovery, and growth of reserves in existing fields
  • Demand: Demand curves, which depend on price, Gross Domestic Product and other phenomena, and are also even more strongly dependent on refining and refinery configurations node by node worldwide
  • Transportation: Pipeline and tanker economics and logistics

MarketBuilder Simulates Refinery Competition as in Real Markets

Figure 2 – Fundamental models of supply and demand drive the World Oil Model

As used in this document, ‘Deloitte’ means Deloitte LLP (and its subsidiaries). Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

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