Meanwhile, OPEC has said in its 2017 World Oil Outlook that demand for its crude would rise in the next two years more slowly than previously expected as a recovery in prices due to OPEC’s return to supply management stimulates output growth outside the group.
A rapid adoption of electric vehicle could cause world oil demand to reach a plateau in the second half of the 2030s, OPEC said in a report, a potential setback for the oil exporter group’s longer term prospects.
The forecast is not the first time OPEC’s annual long-term report has referred to a demand plateau, but it comes in a year which looks set to be “tipping point” for electric vehicles (EVs), according to global miner BHP.”In just a few years, EVs have gone from being completely unaffordable, impractical and not particularly nice, to representing a valid option for a niche pool of customers,” OPEC said in the report.
OPEC said the report’s forecast that world oil demand would rise to 111.1 million barrels per day (bpd) in 2040 could be curbed to 108.60 million bpd if electric vehicles are adopted more widely than assumed in the report’s reference case.
“Moreover, global oil demand is estimated to plateau around this level in the second half of the 2030s,” OPEC said.
The Organization of the Petroleum Exporting Countries is not alarmed, though, saying oil use won’t peak yet and expecting its market share to rise to 46 percent in 2040 from 40 percent in 2016.
“There is therefore no peak oil demand for the foreseeable future,” OPEC Secretary-General Mohammad Barkindo told a news conference.
OPEC and rivals including Russia have been cutting output in 2017 to clear a glut. A resulting price rise will spur a rebound in non-OPEC supply in the next few years, the report shows, before OPEC’s market share increases further down the line.
Demand for OPEC crude will reach 33.10 million bpd in 2019, the report said. While up from 32.70 million bpd in 2016, the 2019 figure is down from 33.70 million bpd forecast in last year’s report.
OPEC raised its forecast for the supply of tight oil, which includes U.S. shale. It said a rise in prices in 2017, plus sustained demand growth, had resulted in a higher forecast for supplies outside OPEC.
“The medium-term outlook for non-OPEC liquids growth has changed quite considerably,” OPEC said in the report, referring to its 2016 forecasts. “Most strikingly, U.S. tight oil production has exceeded previous growth expectations.”
Oil prices hit their highest since July 2015 on Monday, trading above $62 a barrel.
This year’s report did not mention the oil price it assumes but last year’s report assumed OPEC’s basket of crude oils would reach $65 in 2021. Global output of tight oil will reach 7.0 million bpd by 2020 and 9.22 million bpd in 2030, the report said, as Argentina and Russia join North America as producers.
Last year’s estimates were 4.55 million bpd by 2020 and 6..73 million bpd by 2030.
OPEC also increased its medium-term world oil demand forecast, expecting oil use to reach 102..3 million bpd by 2022 – 2.24 million bpd more than in last year’s report.