Skip to main content

World oil demand will plateau in the late 2030s and could by then have begun to decline, OPEC said on Thursday, in a major shift for the producer group that reflects the lasting impact of the coronavirus crisis on the economy and consumer habits.

The prediction from the Organization of the Petroleum Exporting Countries, made in its 2020 World Oil Outlook, comes amid a growing number of other forecasts that the pandemic may prove the tipping point for peak oil demand.

Oil use will rise to 107.2 million barrels per day (bpd) in 2030 from 90.7 million bpd in 2020, OPEC said, 1.1 million bpd below its 2030 forecast last year and over 10 million bpd below its 2007 prediction of 2030 demand. “Global oil demand will grow at relatively healthy rates during the first part of the forecast period before demand plateaus during the second half,” said the report, which looks at the 2019-2045 timespan.

Story continues below advertisement

“Future demand will likely remain persistently below past projections due to the lingering effects of the COVID-19-related shutdowns and their impact on the global economy and consumer behaviour.”

While oil use to fuel cars, trucks and industry will rebound as economies recover, OPEC voiced concern future growth may be partly offset by factors like a post-pandemic shift to homeworking and teleconferencing over commuting, as well as efficiency improvements and a shift to electric cars.

Even before the pandemic, rising climate activism in the West and widening use of alternative fuels were putting the strength of long-term oil demand under more scrutiny. Despite scaling back its forecasts, OPEC had still seen growth.

This year, it also sees potential for demand to begin to decline after 2030 given developments like a faster adoption of electric cars, more fuel efficiency and a larger reduction in business and leisure travel after the pandemic.

This scenario, the Accelerated Policy and Technology case, is not based on any major technological breakthroughs, OPEC said, nor does it represent the full demand reduction possible.

“There is ample scope for far larger implementation of energy efficiency measures, which could potentially depress future oil demand to much lower levels,” OPEC said.

NEAR-TERM DEMAND REBOUND

OPEC has been concerned the pandemic could hit demand permanently, which current and former officials say could pressure oil prices and challenge its efforts to balance the market.

Story continues below advertisement

This year OPEC, with Russia and other allies, a grouping known as OPEC+, agreed record output cuts of 9.7 million bpd, the equivalent of 10 per cent of global supply.

OPEC still sees oil demand rising in the next few years, unlike some others.

Oil use will jump to 97.7 million bpd next year, reach 99.8 million bpd in 2022 - above the 2019 level - and grow to 102.6 million bpd by 2024, it predicts. The 2024 figure is less than last year’s forecast.

OPEC forecast it will pump more in 2021 than this year’s expected 30.7 million bpd, but rising supply from the United States and other outside producers means OPEC output in 2025 will likely be 33.2 million bpd, below 2019′s level, it said.

Longer term, its reference case is for oil demand to reach 109.3 million bpd in 2040 and decline slightly to 109.1 million bpd by 2045.

OPEC said the pandemic had accelerated a trend for lower oil use in industrialised Organisation for Economic Cooperation and Development countries, and non-OECD growth.

Story continues below advertisement

Electric cars are gaining share and there is “a constant improvement in battery economics”, OPEC said. They will account for over 27 per cent of new cars globally by 2045.

Nonetheless, OPEC still hopes to boost production in coming decades as rival output declines.

“Oil will continue to account for the largest share of the energy mix by 2045,” OPEC Secretary General Mohammad Barkindo wrote in the foreword to the report.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies