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Peak oil between OPEC and richest countries

HAS the world reached its peak in terms of its demand for oil as well as the oil production? Have we reached the peak of the demand for 100 million barrels or do we have to wait for more demand in the next 20 years?

Kamel Al-Harami

The argument is divided between oil industry analysts and experts, and among the directors of international oil companies and their American and European colleagues.

ExxonMobil and Chevron are seeking more growth, investment and exploration, while BP, Shell and the rest are moving away from oil and pursuing alternative cleaner energy sources such as solar and wind.

OPEC last week stated that it is expecting the oil demand to grow in the next 20 years from its current 10 million barrels to 109 million barrels by 2040. This is in contrast to the large segments where the peak in oil is close.

Oil consumption collapsed this year from 100 million barrels in 2019 due to the COVID-19 crisis especially with reduced travel movement by car and air. This has led to the collapse of the aviation industry in totality because the people were placed under lockdown. This resulted in oil losing more than 10 million barrels of consumption, and forced most energy analysts to predict that the golden days of peak demand of last year will not return.

As a result, oil prices collapsed to below $20 per barrel from March this year as compared to the comfortable price of $70 in January, which was about ten months ago. This has led to shortage of cash directed at printing paper monies for months to come, with almost zero economic growth.

Of course, oil will be part of the energy mix; it will continue to be needed, according to OPEC. This is at odds with the outlook of some leaders in the oil industry such as BP, which in September this year indicated that oil demand will fall in the next 30 years.

There is no question that the forecasts are covered under today’s COVID-19 pandemic which has not found a solution as there is no valid vaccine in hand or no proper treatment. This could lead to a gloomy forecast about the economic growth and loss of jobs in every country globally. Therefore, until such time, predictions on future oil condition must remain under question.

The division between the rich major oil producing countries and companies will continue in terms of either investing more in oil or taking a break and moving away from oil.

OPEC believes the demand will not peak in the next two decades but oil-rich countries do not have any choice but to keep investing with the hope for a miracle or a sudden surge in demand. Definitely, 20 years is a long time to wait.

By Kamel Al-Harami
Independent Oil Analyst
Email: naftikuwaiti@yahoo.com

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