Oil demand set to rise at fastest pace in 40 years – but peak less than 10 away, says BofA

The sun sets behind a crude oil pump jack on a drilling rig in Loving County’s Permian Basin
  • Bank of America expects higher oil demand from 2021, with consumption growing at the fastest rate since the 1970s.
  • The increased need for oil in the world is probably due to a recovery in maritime transport.
  • Oil demand is expected to peak around 2030 as more people buy electric vehicles.
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Global oil demand is on track to reach its fastest pace of growth in four decades, but demand is also expected to peak in 2030 as more people buy electric vehicles, analysts say. Bank of America.

The COVID-19 pandemic has caused demand to collapse by almost 9 million barrels of oil per day in 2020, but a recovery in transportation needs is expected to accelerate consumption from this year through 2023.

“If our expectations were realized, it would be the fastest 3-year growth rate since the 1970s in absolute volumes,” said the strategists led by Francisco Blanch, head of global commodities research at BofA Merrill Lynch. , in a note published on Friday.

Demand is expected to be “preloaded” in 2021, with an increase of 5.3 million barrels per day, returning to 2.8 million barrels per day in 2022 and ending with an increase of 1.4 million barrels per day in 2023.

Global shipping will support the demand outlook for the commodity, with BofA saying it expects shipping to fully recover to 2019 levels, “an assumption consistent with the limited importance of passenger traffic on the high seas,” according to the report.

“The biggest delta from our projected oil demand recovery scenarios comes from demand for aviation fuel,” which BofA forecasts at 80% in its rapid recovery projection. It would be behind 96% for its road projection and 100% for the sea.

The company said it was “relatively optimistic” about the recovery of road transport, noting a rebound in car sales worldwide after a fall in the second quarter of 2020 when populations around the world locked down to slow the spread of the coronavirus. .

As for cars, the wider adoption of EVs is expected to “trigger” the peak in global oil demand around 2030, as “improving EV economics is accelerating a big spin” towards them, BofA said. His base case calls for electric vehicle sales to reach 34% of total car sales by 2030. Electric vehicle sales are expected to overtake internal combustion vehicle sales by 2035, he said.

Even though there have been rallies in EV maker stocks lately, EVs “do not pose an imminent danger to oil demand”, in part because demand for them has been “significantly higher slow” in recent quarters in the United States and China. Grants and mandates in Europe, meanwhile, helped sales.

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Felix J. Dixon