Global demand for crude oil will be 4.4% higher than the pre-crisis level in 2026
Global demand for crude oil (including biofuels) in 2019 amounted to 100.1 million barrels per day and is projected to decrease to 91.3 million barrels per day in 2020.
Global oil demand will recover in the coming years, after the historic shock of 2020 and, unless there is a much more consistent action against climate change, until 2026 it will grow by 4, 4% compared to the level of 2019, before the crisis broke out.
This is the scenario of the International Energy Agency (IEA), which in its medium-term forecast report presented this Tuesday explains that after last year’s consumption collapsed by 8.7 million barrels per day (to 91 million) , the increase in the following six years will be a total of 13.1 million barrels per day.
We will have to wait until 2023 to reach a new peak of consumption higher than 99.7 million barrels in 2019, but in the following years the rise will continue.
ASIA WILL ABSORB MORE THAN 90% OF THE INCREASE
More than 90% of the rise until 2026 will come from China, India and other Asian countries, which contrasts with the downward trend in the developed countries that belong to the OECD, which, despite the recovery from 2021, will be clearly maintained below the 47.7 million barrels per day they absorbed in 2019.
By type of fuel, the authors of the report believe that gasoline will not be consumed again in the world as in 2019 because the impact of the economic recovery on car traffic will be more than offset by the transition to electric vehicles and other changes in consumer habits.
Demand for diesel, the main fuel used by trucks, will rise, but at a slow pace.
As for aviation fuels – the sector most affected by the coronavirus pandemic – they will not return to the level of 2019 until 2024. The cut in business travel and video conferencing are trends that will endure beyond the crisis.
The other side of the coin is the petrochemical industry, which has been very little affected by the health crisis and will capture 70% of the rise in oil demand until 2026.
MARGINAL IMPACT OF CLIMATE POLICY
The IEA warns that with current policies to combat climate change the impact on oil consumption in the next six years will be “marginal”.
In 2025 the world will absorb 3.5 million barrels per day more than in 2019, when to achieve carbon neutrality by 2070, demand would have to be reduced in that period by 3 million, and even more if it were to be achieved in 2050, which is the horizon of international commitments.
The executive director of the IEA, Fatih Birol, stresses that achieving an orderly transition out of oil is essential to meet climate goals, but that requires “major changes in government policies and accelerated changes in behavior.”
Birol insists that to get the historical peak in crude consumption to arrive as soon as possible “significant action is needed immediately” to improve fuel efficiency, a boost in the sales of electric vehicles and a decrease in the use of oil. to produce electricity.
A “COMFORTABLE” SURPLUS MARGIN
On the supply side, the IEA notes that the margin of surplus capacities due to the collapse of consumption in 2020 reached a record 9 million barrels per day, which offers a “comfortable” cushion for the next few years.
However, it also points out that the sharp drop in prices that occurred in 2020 has drastically reduced investments, so that between 2020 and 2026 only an increase in production of 5 million barrels per day is projected.
In other words, by 2026 the surplus margin could be reduced to 2.4 million barrels per day, which would be the lowest since 2016.
Regarding refining facilities, the current excess capacities can only be corrected with “massive closures”.
According to the IEA, although it has already been announced that the activity in facilities that treat 3.6 million barrels per day will be terminated, in total a cut of at least 6 million will be necessary so that the utilization rate can to return to levels above 80% that allow the profitability of the business.