Global Oil Demand Won't Peak Before 2040, OPEC Says
By David Hodari
The world's appetite for crude oil won't reach its apex for
another two decades, the Organization of the Petroleum Exporting
Countries said Thursday, offering a much more optimistic view of
the world's post-coronavirus demand for oil than many other
In its annual report on oil's long-term future, OPEC forecast
that global oil demand will keep rising until around 2040, when it
will plateau at 109.3 million barrels a day -- some 10% above its
The annual report from the Vienna-based cartel offers a far
brighter future for the supply and demand of oil and gas than the
one offered last month by oil giant BP PLC. The British company is
planning to invest heavily in renewable energy over the coming
years. Oil demand may already have peaked, it said in
Still, OPEC said demand for crude among the relatively wealthy
nations of the Organization for Economic Cooperation and
Development won't grow any further and is forecast to drop 27% from
2019 levels in the period to 2045.
The cartel's global 2040 demand figure was more than one million
barrels a day below last year's forecast of 110.6 million barrels a
day. The coronavirus outbreak "resulted in the sharpest downturn in
energy and oil demand in living memory" and led to "the most severe
economic downturn since the Great Depression," the report said.
Lockdowns and travel restrictions linked to the pandemic's
restrictions resulted in oil market convulsions this year.
Forecasters such as OPEC have found it increasingly difficult to
predict the short-term future for the amount of energy the world
will need this year and next. It will be 2022 before oil demand
returns to its pre-coronavirus level, OPEC said.
Oil prices climbed Thursday, Brent crude oil, the global
benchmark, rose by 1.2% to $42.48 a barrel. West Texas Intermediate
futures, the U.S. benchmark, rose 1% to $40.37 a barrel. Prices
swung sharply this week on a combination of headlines about U.S.
politics, the potential effect of Hurricane Delta, and inventory
While global oil demand won't peak for another 20 years, OPEC
expects the need for fossil fuels in some regions and sectors to
begin shrinking before then. OECD demand and oil consumption in the
global electricity-generation sector have already reached their
maximum, for example.
However, any early peaks will be outweighed by resilient and
growing global requirement for oil in the long term. In 25 years'
time, non-OECD oil demand will have increased 43% from last year's
levels, partly driven by economic booms in China and India.
With many countries seeking to industrialize and expand -- OPEC
expects the global population to hit 9.5 billion by 2045 -- demand
for fossil fuels in the global transport and industrial sectors
will also continue to grow through 2045.
To meet that demand, oil supply will also rise, climbing around
11% from 2019 levels before peaking in 2040 at around 110 million
barrels of oil a day, OPEC said. The cartel also gave its 2045
supply a rosy outlook, putting it almost a third higher than its
level last year. It expects U.S. supply to peak around the end of
That means the outlook for renewable energy may not be as upbeat
as some energy majors hope. If the energy transition continues at
its current pace, non-fossil fuels such as nuclear, biomass, and
renewables such as wind and solar will make up 27.5% of global
energy demand by 2045, up from 18.7% in 2019, OPEC said.
Some of that increase will come at the expense of oil, but
demand for natural gas won't yet have peaked by 2045. Growing
urbanization and its competitive economics will make gas the
fastest-growing fossil fuel in the coming decades.
If global leaders and businesses accelerate their deployment of
renewables, implement a global carbon price, encourage the uptake
of electric vehicles, and tighten pollution regulations, global
emissions could fall by 54% by 2045 compared with their current
trajectory, OPEC said. That, though, would sting oil prices and the
economic growth of energy-exporting countries, said the oil
--Pat Minczeski contribed to this article.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
October 08, 2020 08:14 ET (12:14 GMT)
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