OPEC predicts oil prices recovery in the long-term. Despite the pandemic caused “the sharpest downturn in oil demand in the living memory”, the organization’s forecasts for 2045 are optimistic.
What Covid-19 left
In the wake of the COVID-19 lockdown economic recession, the Organization of Petroleum Exporting Countries (OPEC) revised its previous medium and long-term forecasts for global oil demand growth. The organization extended for the first time its World Oil Outlook (WOO) from 2040 to 2045.
WOO states that in the absence of a COVID-19 vaccine or effective treatments, “it is possible the world will remain in a state of partial emergency for a sustained period.”
The document also mentions that containment measures worldwide created an unprecedented short-term demand shock in energy markets. For instance, oil prices fell more than 34% year-to-date.
However, the report finds that despite the massive drop in 2020, global energy demand will increase in the medium and long-term. This demand will be 72 million barrels of oil equivalent (mboe) up to 2045.
The document also points out that oil will remain the fuel with the largest share of the global energy mix (accounting for more than 27%), and its demand growth will recover during the medium-term.
OPEC only expects limitations to oil demand growth in road transportation due to the rising penetration of alternative vehicles.
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Natural gas will be the fastest-growing fossil fuel (25% of global energy mix), and coal (nearly 20%) will be the only primary fuel to decline in terms of demand.
Regarding renewables, WOO states they will retain the position of fastest-growing energy sources in relative and absolute terms, pointing out power generation will develop at much higher rates compared to overall primary energy demand.
OPEC recognizes that an acceleration of the energy transition may result from the massive global stimulus programs announced to combat the pandemic’s impact; for instance, the European Union currently supports explicitly designed ‘green’ projects.
Within WOO’s final remarks, the organization emphasized all energy sectors will need support to recover and to address future energy needs.