In a major shift in its forecast that puts a timeline to peak oil demand, Organisation of the Petroleum Exporting Countries on Thursday says it expects global oil demand to exceed the pre-pandemic levels by 2022 and to grow steadily until late 2030s, when it will begin to plateau.
The coronavirus pandemic has changed some of the key assumptions in forecasts of all organisations and oil majors, including the oil cartel.
In its ‘World Oil Outlook 2020′ on Thursday, OPEC said, “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 has also reduced its long-term demand projections from last year’s outlook by more than one million barrels per day, expecting world oil demand to rise from 99.7mbpd in 2019 to 109.3mbpd in 2040 and then to slightly drop to 109.1mbpd 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 said it saw 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 noted.
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-Organisation for Economic Co-operation and Development countries will decelerate and lead to an extended period of plateauing oil demand.”
OPEC’s rival supply from the United States’ shale is expected to recover quickly when market conditions improve, but the US tight oil production was unlikely to reach the heights forecast in previous outlooks, OPEC said, adding that it expects US production to peak in the late 2020s.
