Opec expects global oil demand to rise to 103.7mn b/d by 2025, up by 4mn b/d from 2019, with "relatively high" annual increments of 2.1mn b/d and 1.5mn b/d in 2022 and 2023, respectively. This follows "restored" economic growth, especially in the major developing countries, as well as demand "catching up" in the sectors hit most by the pandemic. These include aviation, road transport and industry.
But the "lingering implication" of the pandemic has lowered Opec's demand projections compared with the WOO 2019, and it does not expect to fully bridge this gap in the forecast period out to 2045. Demand is down by over 10mn for 2020 and almost 2mn b/d for 2025 compared with last year's projections.
Oil demand in OECD countries is unlikely to recover to 2019 levels and will peak at around 47mn b/d in 2022-25. Non-OECD demand will continue to rise — led by India — because of "expanding middle class, high population growth rates and stronger economic growth potential", Opec said.
Global demand will peak somewhere in the second half of Opec's 2019-2045 projection, reaching 109.3mn b/d in 2040 before falling to 109.1mn b/d in 2045, the report said. Total, BP and Shell have suggested that oil demand could peak as soon as this decade.
"Efforts to reduce greenhouse gas emissions remain on a path that is far from sufficient to reach the goals of the Paris Agreement," the report said. Opec sees "healthy" long-term demand for energy and oil as political and business leaders prioritise economic recovery, jobs and avoiding poverty.
And Opec sees oil remaining a key fixture in the energy mix, with its share at 30pc in 2030 — largely unchanged from last year's projections — and the largest share of the energy mix in 2045 at 28pc.
The forecast would suit Opec members, who will be required to fill the gap and increase their oil market share as non-Opec supply declines in the long term (see table).
Low oil prices resulting from the Covid-19 pandemic have "significantly affected" current and future liquids supply, down by 9mn b/d and 2mn b/d for 2020 and 2025 from last year's projections, respectively, the report said. But non-Opec crude supply growth in 2019-25 will still slightly exceed global demand growth over the period, although by much less than anticipated last year.
Non-Opec supply will see a "relatively rapid return" to growth from 2021 as the global economy recovers, the report said. This will be driven by US shale oil as well as some longer-cycle, planned upstream projects in Brazil, Norway, Guyana and Kazakhstan.
Longer term, lingering effects of the pandemic will cause some permanent shut-ins of mature wells and fields and curtail upstream investment. Non-Opec supply will plateau towards the end of the 2020s, the report said. It does not expect US tight oil to reach the heights projected in previous outlooks, peaking at 15.8mn b/d in 2030, compared with last year's projection of 17.4mn b/d in 2029.
The speed and sustainability with which production can recover, as well as the technical and economic viability of some wells and fields, partly depends on anticipated oil demand, oil market and price stabilisation, and upstream investment, the report said. Future spending in upstream oil will need to average $380 bn/yr in 2020-2045 in order to meet demand, Opec said. Spending dropped by 32pc this year from 2019, to around $225bn, according to consultancy Rystad Energy.
