Is peak oil demand shut?
The reply to that query is an emphatic no, in response to Ellen R. Wald, the President of Transversal Consulting, who instructed Rigzone that “world vitality demand continues to develop and there’s no approach to generate vitality as reliably and as effectively as hydrocarbons”.
“Due to this fact, hydrocarbon use will proceed to develop,” Wald mentioned.
- Advertisement -
Responding to the identical query, Alex Stevens, the Supervisor of Coverage and Communications on the Institute for Vitality Analysis, instructed Rigzone that “it’s extraordinarily unlikely that we’re wherever near peak oil demand”.
“The people and organizations which can be predicting peak demand make assumptions concerning the feasibility of renewable vitality, electrical automobiles, and public coverage which can be extraordinarily unrealistic,” he added.
“It’s already clear to any cheap person who the net-zero insurance policies which have been pursued in some international locations have been a whole catastrophe … It’s going to take a while, however ultimately, net-zero will turn into a political legal responsibility, and ultimately, these insurance policies shall be rolled again,” he continued.
“Other than that, tons of of thousands and thousands of individuals within the creating world nonetheless lack entry to inexpensive and dependable vitality. As these international locations develop, they will contribute to the rising demand for oil and pure gasoline,” Stevens went on to state.
Stevens additionally instructed Rigzone he would wager that oil and gasoline producers will proceed to seek out new methods to supply these assets at decrease prices whereas minimizing their affect on the atmosphere.
Providing his view, Al Salazar, the Head of Macro Oil and Fuel at Enverus Intelligence Analysis (EIR), instructed Rigzone that “peak demand feels farther away than what we had initially anticipated”.
“OPEC anticipates world oil demand to hit ~112 million barrels per day by 2030, the IEA estimates it to be ~105 million barrels per day. EIR’s most up-to-date estimate is near the IEA estimate. Nonetheless, we’re at present reassessing this view,” he added.
In his response to Rigzone, Salazar outlined that U.S. electrical automobile momentum “seems to be having bother accelerating on the exponential charge traditionally required of a disruptive know-how”.
“This is because of a wide range of causes i.e., vary anxiousness, price, client choice. Nonetheless, China and EU electrical automobile gross sales are nonetheless on monitor with our expectations,” he added.
Salazar additionally famous that “world gasoline demand in 2023 has surpassed pre-Covid ranges (2019), in response to IEA figures”.
“Accelerating electrical automobile gross sales, tightening gas financial system requirements, and make money working from home tendencies have did not curb gasoline demand,” he mentioned.
The EIR head additionally instructed Rigzone that the affect of single use plastic restrictions and recycling targets “are very troublesome to precisely assess”.
When Rigzone requested Stephen Ellis, an vitality and utilities strategist for Morningstar Analysis Companies LLC, if peak oil demand is shut, Ellis famous that the problem with forecasting a peak in oil demand is that not all the demand for oil is linked to displacing light-duty automobiles with electrical automobiles.
“Trucking, ships, and planes, and petrochemicals are additionally influential,” he added.
Ellis instructed Rigzone that the decline in oil demand “shouldn’t be going to be as fast as some anticipate, as substitutes for oil for planes and ships appear very difficult, and petrochemicals (plastics demand) ought to be stronger than anticipated for longer”.
“We anticipate oil demand to peak round 2030, however the decline is more likely to be far slower than most anticipate,” he mentioned.
Considered one of Rigzone’s common market watchers instructed Rigzone, on the situation of anonymity, “I don’t imagine that peak oil demand is shut at hand”.
“The IEA has forecast peak demand by 2030 however proper now I see peak demand occurring past this date,” the market watcher acknowledged.
“I base my assumption totally on the continued progress of non-OECD oil demand. Nations equivalent to India, along with China, southeast Asia, and the Center East are persevering with to progress their petroleum consumption,” the market watcher added.
“As well as, particular business segments equivalent to petrochemical and varied transport demand proceed to develop (as we’ve seen the post-pandemic resurgence of aviation/jet gas),” the watcher continued.
Conversely, the market watcher famous that “we’re seeing continued structural affect on demand within the transport sector from the gradual rise of electrical automobiles, along with different components equivalent to elevated gas financial system, use of extra biofuels, hybrid working, and many others.”.
“International diesel demand stays intact with a bunch of customers in business, transport, and electrical technology. Gasoline consumption shall be essential to observe however even right here, the near-term anticipated lower could also be lower than anticipated,” the watcher added.
The market watcher mentioned geopolitical pressures may even preserve stress on world oil provide, “perpetuating the bifurcated market quite than a extra free and open market”.
“This can affect crude export vectors, import dependencies and costs for key grades equivalent to Brent, the OPEC basket, and Urals,” the watcher added.
“The U.S. will proceed to play a rising function as a worldwide gas exporter although business consolidation continues to make the shale universe extra compact,” the watcher continued.
“A mixture of market pressures, political economics, vitality safety, and know-how will probably assure that predicting peak oil demand will stay simply as difficult because it at all times has been,” the watcher went on to state.
In a J.P Morgan report despatched to Rigzone not too long ago, which outlined the corporate’s oil outlook over 2024 and 2025, the corporate famous that it doesn’t see peak oil demand on the horizon and added that demand progress “ought to be more and more pushed by petrochemicals and air journey on the expense of conventional oil merchandise like gasoline, diesel, and gas oil”.
“Accordingly, the share of refined oil merchandise will probably account for 88.4 million barrels per day, or 85 p.c of oil demand in 2025, with the steadiness coming from pure gasoline liquids and biofuels,” the corporate added within the report.
To contact the creator, e-mail andreas.exarheas@rigzone.com
