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.”
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
More Top Reads From Oilprice.com:
- Oil Prices Are Unlikely To Collapse Again
- The Energy Sectors Most Threatened By A Biden Presidency
- Why Big Oil Is Scrambling To Diversify