The days of oil are not quite over yet according to OPEC, which predicts that the demand for oil will continue to increase until the late 2030s.
The prediction comes at odds to those of oil and lubricant company Total, which sees oil demand peaking in 2030, and BP, which went a step further by suggesting that we may have even already passed peak oil.
In its World Oil Outlook 2020, OPEC forecasts that demand will rise to 109.3 million barrels per day (bpd) in 2040, before levelling off and declining slightly. By comparison, the world’s demand was 99.7 million bpd in pre-pandemic 2019.
The forecast means that OPEC has shaved a million bpd off its long-term outlook, but it bases the recovery in a return to economic growth – particularly in large developing economies where certain sectors that have been particularly impacted by the pandemic will bounce back, such as transport. The report says about the medium term:
“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.”
Regardless, OPEC does concede that the various lockdowns around the world in response to the COVID-19 pandemic may have lingering effects on consumer’s behaviours and the world economy, thus keeping oil demand below previously forecast levels. On the brighter side for the cartel, it seems unlikely that US shale oil production will return quickly to same levels seen before the pandemic.