Global Oil Demand May Have Peaked

Until 2020, the International Energy Agency thought global oil demand would peak by 2030. This year, however, with millions of barrels a day of refining capacity "permanently cut" by coVID-19 and the rise of low-carbon industries such as electric cars, global crude oil demand has "collapsed" and may even have peaked by 2019.

According to OPEC, global demand for crude oil in 2019 was 101 million barrels per day, already close to the group's previous forecast of 108 million barrels per day peak demand.

In fact, OPEC has been revising its forecast of peak global demand for crude oil since 2010. In 2007, OPEC projected world demand for 118 million barrels a day in 2030. OPEC has already cut that forecast to 108 million BPD for 2019. By November 2019, OPEC's estimate of global demand had fallen to 101 million barrels a day.

Among them, the reduction in demand for crude oil caused by the sharp drop in demand for aviation fuel is the most obvious. In the US, for example, jet fuel accounts for about 14 per cent of total refinery capacity. So far this year, the COVID-19 outbreak has reduced us refinery aviation fuel production to about 24 per cent of its previous level and refinery utilization to 67.9 per cent in May, down from 87.4 per cent in January.

According to the International Air Transport Association (IATA), global air traffic will not return to pre-epidemic levels until 2023, with a pessimistic forecast of 2027.

At the same time, the accelerated introduction of new energy vehicles in recent years has also led to a sharp reduction in gasoline and diesel demand. As a result, global oil demand is expected to fall by at least 25 per cent by 2030.

The price of crude oil is expected to remain below $60 a barrel as future global demand for crude continues to decline. This will lead to the declining importance of oil in the business of traditional energy companies. Indeed, many large traditional energy companies have scaled back their oil operations in recent years. Shell's latest report shows, for example, that natural gas accounts for almost half of its business; BP plans to invest tens of billions of dollars in renewable energy between 2020 and 2030.