OPEC expects global oil demand will exceed the pre-pandemic levels in 2022 and grow steadily until the late 2030s, when it will begin to plateau, the cartel said on Thursday, in a major shift in its forecast that put a timeline to peak oil demand.
The coronavirus pandemic has changed some of the key assumptions in forecasts of all organizations and oil majors, including of OPEC, which said in its World Oil Outlook 2020 today that "Going forward, the big question hanging over energy and oil markets is to what extent there will be a longer-term impact on consumer behaviour and thus demand."
Last month, BP said that we may have already passed peak oil demand, while another major, France's Total, sees oil demand growing until 2030.
OPEC, for its part, reduced its long-term demand projections from last year's outlook by more than 1 million barrels per day (bpd), expecting world oil demand to rise from 99.7 million bpd in 2019 to 109.3 million bpd in 2040 and then to slightly drop to 109.1 million bpd in 2045.
"Assuming that the COVID-19 pandemic is largely contained by next year, oil demand is expected to partly recover in 2021 and healthy demand growth rates are foreseen over the medium-term horizon," OPEC said.
The cartel sees global oil demand returning and exceeding 2019 levels in 2022.
"Nevertheless, future demand will likely remain persistently below past projections due to the lingering effects of the COVID-19-related shutdowns and their impact on the global economy and consumer behaviour," OPEC said.
Developing economies will continue to support oil demand growth in the medium term, but in the second part of OPEC's outlook 2019-2045 "demand growth in several key non-OECD countries will decelerate and lead to an extended period of plateauing oil demand."
OPEC's rival supply from the U.S. shale is expected to recover quickly when market conditions improve, but U.S. tight oil production is unlikely to reach the heights forecast in previous outlooks, OPEC said. The cartel expects U.S. production will peak in the late 2020s.
By Tsvetana Paraskova for Oilprice.com
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Comments
OPEC should be under no delusions that there will neither be a post-oil era nor a peak oil demand throughout the 21st century and probably far beyond. Moreover, the notions of an imminent global transition from oil and gas to renewables and a zero emission by 2050 are no more than mirages. Oil and gas will continue to be the core business of the global oil industry and the fulcrum of the global economy well into the future. OPEC should be aware that the global economy runs on oil and gas and this will continue into the foreseeable future.
And while a deeper penetration of electric vehicles (EVs) into the global transport system might slightly decelerate global demand growth, EVs will never ever prevail over the internal combustion engines (ICEs). Technology is making ICEs more environmentally-friendlier and being able to outperform EVs in range, price, performance and practicability.
For the Arab Gulf producers who make the very heart of OPEC, there would be no post-oil era ever.
Contrary to widely accepted wisdom, oil will remain an integral part of the Middle East economies throughout the 21st century and far beyond. Even if cheap alternatives to oil in transport, water desalination and electricity generation were to become readily available in the future, oil will not be left underground because the Arab Gulf producers will use it to power thousands of water desalination plants to generate enough water not only for drinking but also for irrigation to make the desert bloom again. They will also use it to dominate the global petrochemical industries and any industries in which oil is a feedstock.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London