Changing energy landscape key challenge for crude in future

Crude oil lost more than 60% of its value in last 1 year as US closes in to become self-reliant for its oil demand leading to global supply imbalance.

With crude imports to US falling steadily along with US rise in production, Middle East, especially Saudi Arabia, world's largest exporter face key challenge for its share in global exports. This heavy imbalance led to global price war and further over-supply.

Oil Producing Economic Cooperation (OPEC) is close to becoming obsolete, filled with mistrust among members, since it's lost its power over Global crude supply and price.

While this issues are clearly affecting crude oil price in the short to medium run and might even continue to do so, crude oil faces a key longer term challenge which might lead to loss its prominence going ahead.

Since 1980, crude oil is steadily losing its share in global energy consumption and recent technology revolution has increased the pace, which is likely to exacerbate further.

Since US is the largest consumer of energy, the above chart shows changing energy landscape there, which is a fair representative of global picture. Trend is similar in other developed markets, while it is slower in developing ones.

While US's energy consumption from oil has actually dropped from its peak above 40 quadrillion Btu (QBtu) to less than 35 QBtu, Natural gas and Renewables are contributing together contributing close to that of oil.