Global oil demand forecast to reach record levels in 2023

Almost half (46%) of respondents think global demand will be between 101 and 102 million bpd on average in 2023, with a similar number (44%) believing it will be above 102 million. This compares to the 99.9 million bpd seen in 2022, as cited by the International Energy Agency.

Salih Yilmaz, BI Senior Industry Analyst (Energy), commented: “Our latest survey has found a high expectation that oil demand will reach record levels this year, continuing to soar until it hits a peak in 2035. However, while about two-thirds of respondents see oil demand peaking by 2035, this figure is nonetheless down from more than 80% of the respondents in our poll in 2022, which signals a shift in sentiment on the resilience of demand and outlook for continued consumption growth. Only 22% expect peak oil demand before 2030 compared to almost half of respondents in our last survey. The swift recovery in demand following the pandemic – though slower in some parts of the world than others – may be driving more bullish expectations for near-term growth."

In comparison to BI’s 2022 survey, there has been a major shift in opinion related to the pace of green and energy-transition spending by European energy majors. 46% of respondents now believe ‘green’ CAPEX will never reach 50% or more of the overall annual capital outlay; this compares with 15% of respondents previously.

This finding, notes BI, reflects recent strategic adjustments made by Shell and BP this year moderating their energy transition pace, with higher oil and gas investment this decade, driving a flattening of hydrocarbon production levels to 2030 vs a projected decline previously.

All of the respondents of BI's latest survey expect global renewable power to exceed coal-fired generation some time beyond 2030, reflecting divergent views over the pace of transition after coal-fired output reached record highs in 2022.

While the recent uptick appears to be a temporary blip with high gas prices and Russia's invasion of Ukraine forcing many regions to turn to coal for security of supply, the longer-term trend is reflected in the 68% of respondents who see renewables displacing coal by 2030 and 2035. About 31% of participants expect renewables to overtake coal by 2040 or later, which seems to contradict most long-term forecasts based on accelerating coal-to-gas switching.

As a result of the increase in demand and continued focus on oil as a primary energy source, this year’s BI survey found a majority of respondents (79%) believe oil and gas stocks will also outperform wind, solar and other renewable energy sectors over the next 12-24 months.

Read the article online at: https://www.hydrocarbonengineering.com/refining/02102023/global-oil-demand-forecast-to-reach-record-levels-in-2023/