OPEC cuts oil demand forecasts, BP sees ‘peak oil’ in 2020s

Posted September 14, 2020 1:08 pm

Developing countries’ difficulty in containing the spread of the coronavirus pandemic will keep a lid on global oil demand, particularly in India, the OPEC cartel said Monday as it cut its forecasts.

Read more: Canada ‘very concerned’ with OPEC’s decisions amid coronavirus outbreak: Trudeau

OPEC cut its estimates for world demand by 400,000 barrels a day for both this year and next. It now sees a drop in demand of 9.5 million barrels a day in 2020 and a rise of 6.6 million barrels in 2021.

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“Risks remain elevated and skewed to the downside, particularly in relation to the development of COVID-19 infection cases and potential vaccines,” the cartel said in a monthly report on the industry.

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Oil price drop to historic lows amid COVID-19 pandemic
Oil price drop to historic lows amid COVID-19 pandemic

Beside the trouble in some developing countries, which together with the United States have had a harder time than Europe or China in limiting the first wave of virus contagions, OPEC said it expected a slow pick-up in energy demand for transportation in rich countries. Airlines around the world are flying only a fraction of their normal amount of traffic, with a full recovery not expected for another couple of years.

Read more: Higher prices motivate Canadian producers to boost oil production

The price of oil plunged during the initial phase of the pandemic as businesses and transportation ground to a halt around the world. The uncertainty surrounding the industry, coupled with concerns about climate change, has pushed some major oil companies to shift more aggressively towards renewable energy or natural gas.

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Read more: Oil prices are in the negative: COVID-19 rules to stay home played a huge part

COVID-19: Stock markets in Canada, crude oil prices collapse
COVID-19: Stock markets in Canada, crude oil prices collapse

BP says it expects demand for crude oil to peak in the early 2020s. If governments become more aggressive about reducing carbon emissions, demand might never recover from the current slump, its said in a report on the industry’s outlook.

© 2020 The Canadian Press