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Wednesday, April 14, 2021

WEO from IEA. Oil will remain the primary energy source in the world until at least 2040, but her time is running out

The share of oil in global energy balance will decrease by 2040 will drop to 28%, natural gas will strengthen its position as the coal will not return to pre-crisis market volumes

Moscow, 13 Okt – news Agency Neftegaz.RU. The recovery in global demand for oil after the collapse in 2020. on the background of the pandemic coronavirus infection COVID-19 is expected in 2023, but the uncertainty of the economic recovery can make their own adjustments.

Such forecast contains in the annual report of the International energy Agency (IEA) World Energy Outlook 2020 (WEO-2020).

Oil: solid uncertainty

The IEA notes that the oil market remains highly vulnerable to major economic uncertainty, pandemic COVID-19.
Introduced restrictive measures against the dissemination COVID-19, led to a reduction in oil demand by more than 20 million barrels./day in April 2020, especially hard impact on the engine fuel.
The weakening of quarantine measures, there were some signs of recovery, but the restriction of air travel, the transition to remote work and sustainable sales of electric cars continued to weigh on demand for oil.
The IEA expects that oil demand in 2020 will, in General, approximately 8 million bbl./day lower than in 2019.

In its baseline scenario, the IEA assumes that in 2021 COVID-19 will be brought under control and the global economy will return to pre-crisis levels, and the announced policy intentions and objectives will be achieved.

Under the baseline scenario, world oil demand will grow by 5 million barrels./day in 2021 and will return to pre-crisis levels by 2023..

After 2023, the demand will grow by an average of 0.7 million barrels./day until 2030, then world oil demand will come to a plateau and annual growth will slow to 0.1 million barrels.

The scenario with delayed recovery, suggesting the return of the economy to pre-crisis levels by 2023, provides access to the plateau in oil demand by 2030, but the level of this plateau will be below 4 million barrels./day than in the baseline scenario, falling below 100 million barrels./day.

Oil demand in advanced economies will recover in the near future, but will not return to pre-crisis levels in the period up to 2030.

By 2025 demand for oil will grow from 97.9 million barrels./day in 2019, up to 99.9 million barrels./day, by 2030 – up to a 103.2 million barrels./day by 2040 to 104.1 million barrels./day.

In the US demand for oil will gradually decrease from 18.5 million barrels./day in 2019, up to 17.9 million bbl./day by 2025, of 17.5 million barrels./day by 2030, and to 15.2 million barrels./day by 2040

Oil demand in Europe will decline by 4.7 million barrels./a day in the period from 2019 to 2040, and will reach 8.6 million bbl./day.

Demand in the Asia-Pacific region during the same period, from 32.5 million barrels./day to 37.9 million barrels./day.

The Outlook for oil demand in India was revised downward by 0.4 million barrels./a day in 2030 compared with last year’s forecast, but India remains one of the fastest growing markets, mainly in connection with the increasing use of motor fuel.

The forecast for China has also been reduced, but China remains an important factor in the growth of world oil demand in the intervening period.

Oil demand in China will peak around 2030 and will make up slightly more than 15 million barrels./day.

Natural gas: the recovery will be, but not in Europe

The global gas market is also strongly affected by the pandemic COVID-19, but the recovery of natural gas demand will be very fast.
In 2020 the demand for gas in the world will decrease by 3% to USD 3.9 trillion m3.
This will be the biggest annual drop in demand since then as gas became one of the main fuels in 1930x gg.
However, natural gas has proven to be more resistant to the effects of the pandemic COVID-19 than oil and especially coal, which the market will not recover to pre-crisis levels.
The use of gas in the construction sector, as a rule, largely dependent on weather conditions, and lower consumption in commercial and public buildings during the period of quarantine was partly offset by an increase in domestic consumption.

After falling in 2020, gas demand will return to growth and recover quickly, reaching 4.6 trillion m3/year by the end of 10 years.

I.e. in the year 2030, gas demand will be almost 15% higher than in 2019.

First and foremost, the growth of demand will be driven by emerging markets and developing economies, but in Mature markets the overall demand is static.

China and India provide approximately 45% of the total growth in gas demand in the period up to 2030, also steady growth in demand will occur in the middle East and Southeast Asia.

In the United States also is expected a slight increase since the low gas prices will stimulate the industry for this type of fuel.

In the EU, despite some increase in connection with the decommissioning of coal and nuclear capacity, gas demand will not return to the levels of 2019, as renewable energy sources (RES) will take a greater share of this market.

As a result, by 2030 the demand for gas in the EU will decrease by 8% compared to 2019

What at the prices?

The IEA expects that as the demand recovery, oil prices will return to levels above $ 70. U.S./bbl.
The mark of $ 70. U.S./bbl. the price of oil will overcome in 2025
Further restoration of demand for oil will require increased investments in exploration and production that would be supported by a rise in oil prices to $ 75. U.S./bbl. by 2030
Prospects for increased investment in the sector remain uncertain because of changes in market structure and the IEA expects that investment in the period up to 2040 will be sent only to compensate declining production at existing fields.
In the previous, pre-crisis WEO, the IEA forecast growth in oil prices up to 88 USD. U.S./bbl. by 2030 and $ 103. U.S./bbl. by 2040
The IEA also notes that the price of gas in the regional markets will tend to global prices close to the prices on the gas market of the USA.

Energy in General

Global energy demand in 2040 in the baseline scenario, the IEA will grow by 18.6% compared to 2019, to 17,085 billion tons of oil equivalent/year.
The destructive influence COVID-19 on the global economy led to a reduction in IEA forecast in its previous report to 2,092 tons of oil equivalent/year.
Oil demand to 2040 will grow by 6.8% to 4,832 billion tons, gas – by 29.4%, to 4,321 billion tons of oil equivalent, coal will decline by 12.2% to 3,314 billion tons of oil equivalent
While the IEA expects global growth in oil demand will be completed in the next 10 years, but the main source of energy for the next 20 years still remain.
The share of oil in global energy balance will decrease from 31.4% in 2019 to 28.3% in 2040, the share of gas will increase from 23.2% to 25.3%, the share of coal will decrease from 26.2% to 19.4%.

The total energy investments in the world up to 2040, the IEA estimates at 54,366 trillion. USA.

Investment in renewable energy will amount 7,696 trillion. The US, mains – 9,493 trillion. USA.

An estimate of the total investment, the IEA reduced to 4,376 trillion. USA, but investment in renewable energy will grow by 1,256 trillion. The United States, and the mains – on 1,005 trillion. USA.

Simultaneous growth of investment in renewable energy and power grids, the IEA believes it is important because otherwise network will be the weak link in the transformation of the energy sector, which will have negative consequences for the reliability and security of electricity supply.


Previously, the forecast of development of oil market, OPEC introduced, noting in the review World Oil Outlook 2020 (WOO-2020) the similarities to that and the IEA in the WEO-2020.
OPEC and the IEA, refers to the crisis caused by the COVID-19, the most destructive phenomenon for the global energy industry, noting that the impacts of the pandemic will have an impact on the market for many years.
According to OPEC forecasts, in 2020 the demand for oil in the world will fall by 9 million bbl./day to 90.7 million barrels./day, and return to pre-crisis level 99.8 million barrels./the day will be possible in 2022
This recovery in global oil demand in the short and in the long term will happen in developing countries, whereas for developed countries the age of oil is finished.
This shift is due to both the saturation of the transport sector in OECD countries and a slowdown in economic growth and policy climate aimed at the replacement of fossil fuels decarbonisation energy sources.
However, OPEC expects the oil will retain its role as a leading energy source in the period up to 2045, although its share is gradually decreasing, and the role of natural gas, on the contrary, to grow.

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