OPEC thinks oil demand will return to pre-crisis levels in 2022
OPEC expects to emerge from the pandemic with a greater share of global oil sales, after 2020's price downturn battered rivals in the U.S. and elsewhere.
The Organization of Petroleum Exporting Countries boosted forecasts for the amount of oil it will need to supply over the next four years, shifting last year's prediction that it would lose market share until the middle of the decade.
World oil demand will return to pre-crisis levels in 2022, by which time the group will need to provide 34.3 million barrels a day, or about 1.4 million more than previously projected. The 13-member cartel controls about a third of global supplies.
The turnaround would provide some breathing space for OPEC and its allies, who have halted vast amounts of crude production this year while the coronavirus shock depresses fuel demand. OPEC pumped 24.4 million barrels a day of crude in September, according to Bloomberg data.
OPEC+, a coalition that spans members of the cartel like Saudi Arabia and outsiders such as Russia, aims to restore the halted output over the next 18 months, and the retreat of their rivals would help with that plan.
The alliance's efforts to phase out the cuts have so far been stymied, as a slow recovery in demand pins crude prices near US$40 a barrel, much lower than most OPEC members need to cover government spending.
In its World Oil Outlook (WOO) published on Thursday, OPEC projected that demand will continue to grow for another two decades — countering the prevalent industry view that the transition to cleaner energy will herald a more imminent plateau. “The WOO 2020 projects that oil will be needed for years to come ... it will remain a key fixture in the energy mix. In any case, low-cost producers, including many OPEC NOCs (national oil companies), will continue to play an all-important role in supplying oil to the world, even in a future in which oil demand no longer grows, or even decline,” it said.
The report identifies Canada as one of only four non-OPEC countries that would show meaningful supply growth post2025. The group estimates Canada's output fell to five million bpd in 2020, compared to 5.4 million bpd in 2019, and it will gradually rise to 5.6 million bpd by 2025, and rising to 6.2 million by 2045. Canada is projected to remain the second-largest tight-oil producer behind the U.S., OPEC said. The growth will be slower than expected due to pipeline constraints.