Slower demand growth due to the pandemic and a drop in global oil supply due to low investments could result in peak oil demand 2-3 years sooner than an earlier view that demand will peak around 2030, Norway’s energy giant Equinor said on Tuesday.
The oil and gas major, which has just announced its ambition to become a net-zero energy business by 2050, following other major European companies in this pledge, said in its annual Energy Perspectives report that the pandemic and its effect on the way people work and interact could challenge the earlier assumption of peak oil demand around 2030.
In addition, the promises of major economies to “build back greener” could mean that more energy investments will be heading renewables’ way, driven by support from governments and the general public, according to the Norwegian major.
COVID-19 has altered not only the way people commute and use transport, but it has also led to reduced investments in oil supply, Equinor said. Therefore, the 2030 peak oil demand assumption could be challenged, as “a decline in oil supply due to low investments could force that date 2-3 years earlier,” the company added.
Other forecasters have also said that the pandemic is set to accelerate the timeline of peak oil demand. In its annual outlook in September, BP said that globally, we may have passed peak oil demand last year, as fuel consumption may never recover from the pandemic-inflicted decline.
Even with this estimate, BP’s chief executive Bernard Looney said at an online forum last month that “peaking of oil demand does not mean the end of oil. Oil will be around for a very, very long time.”
France’s Total sees global oil demand to stop growing in 2030.
OPEC expects global oil demand will exceed the pre-pandemic levels in 2022 and grow steadily until the late 2030s, when it will begin to plateau, the cartel said last month in a major shift in its forecast that put a timeline to peak oil demand.