Despite this year's drop in oil demand everywhere in the world - including in the top growth driver in recent years, Asia Pacific - demand for oil products in the region has not run its course and could jump by as much as 25 percent by 2040 compared to 2019, Wood Mackenzie said on Tuesday.
According to estimates from the energy consultancy, oil demand in Asia Pacific is on track to drop by 1.8 million barrels per day (bpd) this year compared to the pre-COVID levels in 2019.
As per OPEC's latest, more positive estimates in its July Monthly Oil Market Report (MOMR), oil demand in Asia Pacific is expected to drop by 900,000 bpd in 2020 year over year, before rising by 500,000 bpd in 2021.
Despite the hiccups in oil products demand in the short term, Wood Mackenzie sees oil demand in the Asia Pacific region rising in the long term, potentially by 25 percent, or by 9 million bpd over 2019, reaching 44.8 million bpd by 2040.
While the coronavirus crisis and the demand crash have upended short-term projections, long-term demand in Asia Pacific will continue to be robust, thanks to increased demand for mobility and petrochemicals, according to WoodMac. As per the consultancy's estimates, Asia Pacific is set to account for more than half of global oil demand growth by 2040.
The hotspots for oil demand, however, are expected to shift away from China-the world's top oil importer-to India and Southeast Asia, requiring new refining capacity in these countries, Wood Mackenzie said.
"Although demand continues to grow, the rate of growth in the next 20 years is less than half that of the past 20 years, primarily because of higher fuel efficiency, penetration of electric vehicles and displacement of oil in the transport sector," Sushant Gupta, Research Director - Asia Pacific, Refining and oils market at Wood Mackenzie, said.
By Tsvetana Paraskova for Oilprice.com
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