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Oil demand growth will peak soon, pushing prices lower, Rystad Energy has forecast, seeing Brent crude fall to some $60 per barrel in 2027.
"Demand is peaking," Claudio Galimberti, the head of North America Research at the Norwegian consultancy, said this week, as quoted by Reuters. "We anticipate prices to taper off in the next three to four years, primarily due to ample supply."
The ample supply, Galimberti said, will come from the United States, even though the shale industry has indicated it has no immediate plans for significant production growth.
The Financial Times reported this month that shale oil executives were unwavering in their determination to continue prioritizing capital discipline at the expense of production growth.
“I just don’t see producers getting all excited about near-term price and I think we are going to see continued [price] volatility,” the FT quoted Devon Energy’s chief executive Rick Muncrief as saying.
“By nature, most of us will just say ‘let’s stay disciplined. Let’s keep our production flat’,” Muncrief also said.
Indeed, EIA production figures support this perception, with the agency forecasting a decline in shale oil output this month, even though overall production had been growing throughout the year. This growth, however, has been slower than it used to be during the boom years in shale, prompting many observers to talk about peak shale.
According to Rystad’s Galimberti, oil demand growth this year would slow down to 2.4 million bpd from 3.7 million bpd last year, further declining to 1.2 million bpd in 2025 and to just half a million barrels daily in 2026.
By that year, the Rystad analyst said, U.S. shale production will grow to 15 million barrels daily, providing that ample supply that should keep prices in check. But according to him, U.S. shale could rise further, to as much as 18 million barrels daily, if oil prices remain elevated for longer thanks to OPEC policies.
By Irina Slav for Oilprice.com
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.