OPEC predicts rebound in oil demand ahead of post-2035 plateau
- Group says demand for oil in 2023 will exceed 2019 level
- Trims 2030, oil demand forecast 2045
- Global oil demand expected to peak after 2035
- OPEC’s supply in 2026 remains lower than in 2019
LONDON, Sept. 28 (Reuters) – Demand for oil will rise sharply over the next few years as economies recover from the pandemic, OPEC forecast on Tuesday, adding that the world must continue to invest in production to avoid a crisis despite an energy transition.
The view of the Organization of the Petroleum Exporting Countries contrasts with that of the International Energy Agency, which in a May report said investors should not fund new oil projects if the world wants to achieve zero net emissions. Read more
Oil use will increase by 1.7 million barrels per day in 2023 to 101.6 million barrels per day, OPEC said in its Global Oil Outlook 2021, adding to robust growth already forecast for 2021 and 2022, and pushing demand above the pre-pandemic rate of 2019.
“Demand for energy and oil increased dramatically in 2021 after the massive drop in 2020,” OPEC Secretary General Mohammad Barkindo wrote in the report’s foreword. “Further expansion is planned for the longer term.”
With demand for oil picking up again, OPEC and its allies such as Russia – a group known as OPEC + – are reversing record supply cuts from last year. But there are signs that some OPEC + producers are unable to pump more in part due to a lack of investment, which has driven prices up. Read more
OPEC also lowered its longer-term oil demand estimates, citing changes in consumer behavior brought on by the pandemic and competition from electric cars. Global demand is expected to peak after 2035, according to the report.
Last year’s report said global oil demand will exceed 2019’s rate in 2022, not 2023. Now demand is expected to reach 106.6 million bpd in 2030, down 600,000 bpd. / d compared to last year and 11 million b / d lower than OPEC’s opinion in 2007 on what 2030 demand would be.
Assuming faster adoption of existing technology, the policy and accelerated technology scenario, demand could decline by the 2030s, according to OPEC chart showing a more pronounced drop in demand than a chart similar last year.
“Telecommuting / working from home is becoming a norm for many businesses in the wake of the pandemic,” OPEC said.
“Long-term growth in oil demand will be constrained by the increasing penetration of electric vehicles.”
Last year, OPEC + agreed to record production cuts of 9.7 million barrels per day, the equivalent of 10% of global supply.
With demand picking up, those barrels are being put back on the market, but OPEC said it was essential to step up investment in supply to avoid a future crisis.
Last year, upstream oil investment spending fell nearly 30% to about $ 240 billion due to the pandemic.
“It is clear that underinvestment remains one of the great challenges of the oil industry,” wrote Barkindo. “Without the necessary investments, there is the potential for further volatility and a future energy deficit. “
OPEC sees demand for its oil increase over the next few years, but increased supply from the United States and other outside producers means OPEC’s production in 2026 will likely be 34.1 million bpd, below 2019 level, he said.
The group spent the last year admitting that demand would peak someday, after predicting growth for years. The demand forecast for this year’s 2045 has been reduced to 108.2 million bpd, down 900,000 bpd from last year.
Still, OPEC is optimistic about its future prospects, seeing its market share increase over the past decades as competition from non-OPEC producers weakens. OPEC expects tight reservoir oil production in the United States, another term for shale, to peak around 2030.
“Oil should always retain its number one position in the energy mix,” Barkindo wrote.
Reporting by Alex Lawler; Editing by Susan Fenton and Alexander Smith
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