OPEC cuts long-term forecast for demand growth

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A discarded face mask is pictured near an oil pump in Long Beach, Calif., August 22, 2020.APU GOMES | AFP via Getty Images

LONDON – OPEC said on Thursday it had downgraded its forecast for long-term global oil demand growth, as the industry faced an “existential threat” this year in the wake of the coronavirus pandemic and as climate policies continued to shape the future of energy.In its closely watched annual World Oil Outlook, the Middle East-dominated oil producer group outlined its medium to long-term expectations for the global economy, demand for oil and energy, and policy issues. related. It also extended its forecast period to 2045, starting from 2040.

OPEC said global oil demand is expected to grow by nearly 10 million barrels per day (b / d) over the long term, to 109.3 million b / d in 2040 and 109.1 million b / d in 2045. Global oil demand held steady at 99.7 million b / d in 2019.

It represents a downward revision of more than 1 million bpd from the 2040 levels projected in the group’s 2019 outlook, published last November.

What are some of OPEC’s main assumptions?

OPEC said it believed oil would remain the main contributor to the energy mix until 2045, accounting for more than 27%, followed by gas (around 25%) and coal (almost 20%). These respective energy sources were also the top three contributors to the fuel share in 2019.

The contribution of solar, wind and geothermal energy is expected to grow by 6.6% per year on average until 2045, “significantly” faster than any other source of energy. These renewable energy sources are expected to represent 8.7% of the fuel share in 2045, compared to 2.1% in 2019.

A member of the Austrian military stands next to the Organization of the Petroleum Exporting Countries (OPEC) logo outside OPEC headquarters in Vienna, Austria, April 9, 2020.

Leonhard Foeger | Reuters

The size of the global economy is expected to more than double, with global GDP expected to exceed $ 258 trillion in 2045, up from around $ 121 trillion in 2019.

The world’s population is expected to grow from more than 1.7 billion people to almost 9.5 billion in 2045, OPEC said, from 7.7. billion in 2019.

Climate policy

International benchmark Brent futures traded at $ 42.76 a barrel Thursday afternoon, up nearly 1.8% for the session, while US West Texas Intermediate futures traded set at $ 40.61 per barrel, or about 1.6% more.

Oil prices have fallen more than 34% since the start of the year.

The impact of the pandemic and the resulting containment measures around the world have created an unprecedented demand shock in energy markets this year. The Executive Director of the International Energy Agency, Fatih Birol, previously said that 2020 could be the worst year in the history of oil markets.

In the absence of a vaccine for Covid-19 or the development of effective treatments, OPEC said “it is possible for the world to remain in a state of partial emergency for an extended period.”

“Additionally, given that some of the massive stimulus programs announced to tackle the impact of the COVID-19 pandemic are explicitly designed to target support for ‘green’ projects, renewable energy and others, an acceleration of the transition energy is possible, ”he added, citing as an example the proposals announced by the EU.

OPEC, which brings together some of the world’s most powerful oil producers, said it expects policy instruments that primarily target the goals of the 2015 Paris Agreement on climate change “will continue to support a transition to climate change. renewable energy sources and a reduction in greenhouse gases (GHGs) ”.

However, the group added that

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