Oil demand to hit 110.6mb/d by 2040, says OPEC
•Prices rise as cartel, allies agree on 1.7mbpd output cuts
The organisation of the Petroleum Oil Exporting Countries (OPEC), said oil will continue to contribute the largest share in the energy mix with demand hitting 110.6 million barrel daily (mbd) by 2040. OPEC World Oil Outlook (WOO) released yesterday, also noted that total primary energy demand would expand by about 25 percent in the next 20 years.
“All forms of energies will be required in the future to help to meet expanding demand in a sustainable way, balancing the needs of people in relation to their social welfare, the economy and the environment,” OPEC said.
Meanwhile, prices of oil edged higher as OPEC and allies led by Russia, agreed to one of the deepest output cuts this decade to prevent oversupply in a deal that will apply for an unexpectedly short period of the first three months of 2020. Russian Energy Minister Alexander Novak said a panel of energy ministers including Saudi Arabia and Russia had recommended OPEC+ deepen the cuts by 500,000 bpd. A cut of 1.7 million bpd would amount to 1.7% of global supply.In the afternoon of Thursday, Bonny Light hovered around $65 per barrel, Brent crude futures were up 21 cents, standing at $63.21 a barrel.
The report also highlighted that natural gas will witness the largest demand growth in absolute terms, and renewables will see the largest growth in percentage terms.The demand for oil according to the group will be mainly driving by developing countries, particularly outside the Organisation for Economic Co-operation and Development (OECD).
The oil cartel noted that non-OECD countries would demand growth by 21.4 million b/d by 2040 (compared to 2018), whereas the OECD region is expected to contract by 9.6 mb/d.“Long-term demand growth comes mainly from the petrochemicals, which would require 4.1 million b/d, road transportation; 2.9 million b/d and aviation, which would need 2.4 million b/d sectors.
The group also believes that total vehicle fleet, especially passenger and commercial vehicles would hit 2.4 billion by 2040, witnessing an estimated grow by more than 1 billion. Similarly, OPEC said the long-term share of electric vehicles in the total fleet would increase by 13 percent in 2040, predicating the forecast on falling battery costs and policy.
“Non-OPEC liquids supply is projected to grow by 9.9 million b/d between 2018 and 2024; the majority coming from U.S. tight oil, but from the mid-2020s non-OPEC sees a steady decline. Demand for OPEC liquids is projected to increase to around 44.4 million b/d in 2040, up from 36.6 mb/d in 2018.
“Crude distillation capacity additions of around 8 million b/d are expected between 2019 and 2024, with over 70 percent in the Asia-Pacific and the Middle East. This is close to 50 percent of the total capacity additions required in the long-term to 2040. “Global crude oil and condensate trade is estimated to remain relatively static at around 38 million b/d between 2018 and 2025, before increasing to around 42 million b/d by 2040,” the report noted.