Global oil demand will peak sooner than previously thought: IHS Markit
Global demand for crude oil will peak sooner than previously thought, as the COVID-19 pandemic and clean energy trends accelerate the transition from fossil fuels, according to IHS Markit.
The latest long-term outlook for the London-based research firm cuts four years and 5.2 million barrels per day (bpd) to its 2020 peak demand estimate. IHS Markit now sees global demand for oil gross increase through 2033, peaking at 81 million bpd, before starting to decline in the long term.
At the same time, the new baseline scenario of the company’s global demand for refined products like gasoline, diesel and jet fuel predicts a peak in 2036 and demand in 2050 below 2019 levels.
“The energy transition accelerated during COVID-19, and the combination of changing consumption patterns and an increased sense of urgency around climate change will translate into increased political commitment and financial support for the decarbonization of industry “, Sandeep Sayal, vice president of IHS Markit. president of downstream oil and refining markets, said in a statement Monday.
The forecast comes as the Organization of the Petroleum Exporting Countries (OPEC) warns that the Delta variant of the coronavirus will weigh on the oil recovery until next year. OPEC forecasts oil demand to average 99.7 million bpd in the fourth quarter of 2021, down 110,000 bpd from last month’s forecast. These figures refer to total petroleum liquids, which include both crude oil and other refining inputs.
Predictions of “peak oil,” the hypothetical point at which demand for crude peaks before it begins to decline, have been shown to be incorrect in the past. However, Rory Johnston, managing director and market economist at Price Street, sees the accuracy of those forecasts improving.
“I’ve been thinking for a few years now that demand will peak in the mid-1930s, but it’s still very uncertain. The absolute rate of decline from that plateau also depends on a bunch of things like electrified long-haul road freight. , aviation, etc., ”he said in an interview.
IHS Markit forecasts a break-even price of US $ 50 per barrel of Brent crude (BZ = F) for most of the world’s oil supply sources through 2040.
Johnston expects oil and gas companies to reduce their upstream spending and favor small projects that build on existing infrastructure.
“As these peak demand forecasts advance, less and less upstream dollars will be spent resulting in occasional price spikes as we see today,” added Johnston. “It will also accelerate the transition to more expensive and volatile fossil fuels.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on twitter @jefflagerquist.