The Organisation of Petroleum Exporting Countries (OPEC) on Monday projected brighter outlook for oil and gas demand in the next two decades with oil demand growing to 90 million barrel per day (bpd) in 2021.
Secretary General of the organisation, Mohammad Barkindo, who gave these forecasts in his address at the Crescent Ideas Forum via video conference, said OPEC outlook for 2020 oil demand remained now slightly above 90 million bpd, representing a sharp decline of nearly 10 million b/d from when the year started and almost an 11million b/d contraction compared to what we forecast in January.
According to him, the oil cartel expects growths to bounce back to just over 96 million b/d, compared to its pre-Coronavirus (COVID-19) expectations for demand reaching almost 102 million b/d next year.
Barkindo attributed the recent revisions to the easing pace of the economic recovery and recent COVID-19 containment measures, which are expected to impact transportation and industrial fuel demand well into next year.
The OPEC Secretary General explained that the crucial market rebalancing efforts were further complicated by high stock levels, adding that preliminary data for October, showed that total Organisation for Economic Cooperation and Development (OECD) commercial oil stocks were 208 million barrels above the latest five-year average, compared to 13 million barrels below the five-year average in January.
He said: “These figures would have been dramatically higher and clearly unsustainable had it not been for the unprecedented cooperative efforts taken to address the imbalance in fundamentals and stabilise the market.”
Barkindo further noted that in spite the current outlook, crude oil would continue to be relevant in the foreseeable future, up to 2045, with oil demand expected to rise by almost 10 million bpd from 2019’s levels to around 109 million bpd in 2040, and then begin to plateau.
On oil demand generally, he projected that non-member countries of the OECD will be the growth powerhouse and members will account for around 68 per cent of overall oil demand by 2045, with the economic giants of India and China leading this growth.
He clarified: “In absolute terms, we expect oil demand in the developing and emerging economies rising by 22.5 million bpd to around 74 million bpd in 2045. The outlook for crude oil may look anemic now, but we anticipate a gradual normalisation of demand growth as the world recovers from the COVID-19 shock.
“Our analysts foresee global oil demand returning to relatively robust annual growth and reaching nearly 104 million bpd by 2025.
“We expect the global economy to be more than double from 2019 to 2045, to 258 trillion dollars and the population to grow by at least 20 per cent, to 9.5 billion. Simply put, our world will continue to thirst for energy. The World Oil Outlook anticipates that oil will remain the dominant fuel in the global energy mix for the foreseeable future, accounting for a nearly 28 per cent share in 2045, followed by gas at around 25 per cent.
“It is important to point out that it is the mainstream consensus of the leading reporting agencies that oil and gas will retain their prominence in the energy mix for the foreseeable future.” Barkindo added.
While expressing optimism that the vaccine developments could also help reboot the global economy, the industry expert said that even then “the oil market today is overshadowed by the resurgence of COVID-19 and a slower pace of economic recovery than we had envisioned in the second half of the year.”
Barkindo further explained that OPEC’s outlook showed that petrochemicals and transportation would drive demand for crude oil going forward, adding that electricity generation is the only area expected to see a decline in demand for oil as renewables and natural gas demand will surge.