Global oil demand has not yet peaked, IEA says

The agency expects global energy investment to fall by 20 per cent in 2020

A crude oil pump jack in the Loving County, Texas. The Paris-based IEA expects a fall in global energy demand this year of around 5%. Reuters

Global oil demand is not expected to reach its peak, with an economic recovery after the Covid-19 pandemic likely to revive demand to 100 million barrels per day levels, according to the executive director of the International Energy Agency.

“[The view that] 100 million bpd will be the peak and [then it] will continue to decline, I don’t subscribe to that,” Fatih Birol told the online Abu Dhabi International Petroleum Exhibition and Conference on Tuesday.

“It is misleading to say that global oil demand has already peaked.”

Mr Birol expects a strong rebound on the back of a robust economic recovery.

The agency forecast a decline in this year's global energy demand of about 5 per cent – seven times larger than the decline after the 2008 financial crisis – after coronavirus-induced movement restrictions dampened demand for fuel.

The agency also said energy investment levels around the world will decline by 20 per cent from a year ago.

Dr Sultan Al Jaber, Minister of Industry and Advanced Technology and Adnoc group chief executive, told the conference on Monday that demand could rebound over the next decade.

“We expect that oil demand will grow to over 105 million bpd by 2030 and [oil will] continue to supply over half the world’s energy needs for many decades to come,” he said.

Dr Al Jaber said about 75 million bpd of oil were consumed at the height of global lockdowns between March and April. Oil demand was below 90 million bpd for only 12 weeks this year.

The agency said last month that the recovery of the oil market “looked fragile” amid weak demand in the third quarter.

It cut its forecast for the period by 200,000 bpd and attributed this to weak demand in North America and India, which have the highest number of Covid-19 infections.

The agency left its overall demand estimate for this year unchanged at 91.7 million bpd, down 8.4 million bpd from last year.

Its estimate for next year is for a 5.5 million bpd increase that is expected to take overall demand to 97.2 million bpd.

Oil prices remained buoyant after rising by 10 per cent during intraday trading on Monday amid reports that a vaccine developed by US pharmaceuticals company Pfizer had been 90 per cent effective during trials.

Brent was up 1.7 per cent to trade at $43.12 per barrel at 8.33pm, while West Texas Intermediate rose by 1.8 per cent to $41.02 per barrel.