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OPEC harnesses for drastic oil demand



OPEC admitted that demand for oil in the next few years could be drastically weaker than previously thought, due to a combination of a weakening economy, growing supply elsewhere, and pressure from climate activists.

In its World Oil Outlook, OPEC said that demand for oil could only reach 32.8 million barrels per day (mb / d) by 2024, a figure significantly below 35 mb / d from last year's projections. Demand is still expected to grow in non-OECD countries going forward, but OPEC admitted that demand could peak in the OECD in 2020.

Slow economic growth was also incorporated into the lower medium and long-term estimates. "Given recent signs of stress in the global economy and the prospects for global growth, at least in the short and medium term, the outlook for global oil demand has narrowed somewhat to 1

10.6 mb / d by 2040," OPEC Secretary General Mohammad Barkindo said in the report.

OPEC said that non-OPEC production continues to rise, especially from the US slate, although not exclusively. The cartel has had to limit production for several years to prevent prices from crashing, even in the face of relentless slate growth. U.S. slate is growing, but is now declining dramatically. At the same time, countries such as Norway, Brazil, Canada and Guyana are expected to continue to add supplies over the next few years. Larger bid increase puts OPEC in a bond.

Meanwhile, attention is being paid to the risks of the destruction of demand in the OPEC report. The term "climate change" appears almost 50 times in the report, and the cartel acknowledged that electric vehicles "are gaining momentum."

OPEC said it was "fully committed and supporting the Paris Agreement" and that it is "no Planet B." The group reiterated the urgent need for oil-exporting countries to diversify their economies, although there is relatively little evidence that OPEC Related: Trump vows to protect Syrian oilfields against ISIS

OPEC is not exactly preparing for the end of the oil vein, but it still sees demand increase by around 12 mb / d over of the next two decades, a scenario that would run counter to any viable chance of averting the climate crisis.

Despite all the climate risks, the incentives to diversify economies, the opportunity to weaken demand and competition from non-OPECs supply, the cartel still seems unsolved, at least outwardly.

As if to refute a pending downfall for oil producers, Barkindo said that while renewable energy is a leader in growth n going forward, "oil and gas are still expected to meet more than 50% of the world's energy needs" by 2040. Although consumption growth is declining, demand in each five-year period extends to the end of the timeframe, "Barkindo emphasized.

He said that the global upstream, midstream and downstream oil sector "needs" $ 10.6 trillion in investment between now and 2040. "OPEC member countries are fully committed to making the necessary investments to keep consumers well-supplied , "said Barkindo.

Nevertheless, in the next section, he admitted the risk. The industry is now concerned about policies that may have an impact on investment; for example, those related to climate-related financial disclosures. " Related: Iran's $ 280 Billion Billion Sanction Skirting Scheme

Just a few months ago, Barkindo said the biggest threat to the global oil industry came from climate activists. "There is a growing mass mobilization of world opinion … against oil," Barkindo said. In response, 16-year-old Swedish climate activists tweeted Greta Thunberg “Thank you! Our biggest compliment yet! "

Recently, Kuwait said it could lower its oil production targets due to climate change. Instead of aiming to produce 4.75 mb / d by 2040, the country can only target 4 mb / d, sources say to Bloomberg.

Even the partial listing of Saudi Aramco could be seen in the context of questions of peak demand. When consumer growth is in doubt and climate pressure escalates, Riyadh hopes to bring in some pieces today.

By Nick Cunningham, Oilprice.com

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