KAPSARC Oil Market Outlook: Global Oil Demand to Increase by 4.2 MMb/d in 2021

KAPSARC Oil Market Outlook: Global Oil Demand to Increase by 4.2 MMb/d in 2021

The ongoing recovery in economic activity this year, coupled with vaccine availability and COVID-19 immunity that may help stem the tide of the virus in the near future, are fuelling optimism in the oil markets.

The latest KAPSARC Oil Market Outlook for Q1 2021 forecast that the total global oil demand is expected to increase year-on-year by 4.2 million barrels per day (MMb/d) this year and reach a yearly average of 96 MMb/d. Global oil demand is expected to further grow by 3.5 MMb/d in 2022, returning to pre-pandemic 2019 levels by the third quarter of 2022.

In its analysis, KAPSARC notes that these growth projections are contingent on the success of virus containment measures and the continuation of economic stimulus packages rolled out by governments worldwide.

KAPSARC examined several other factors impacting the oil markets over the near to medium term:

  • Demand dynamics: The sustainability of demand growth hinges on the impact of COVID-19 vaccinations and the speed of distribution on the recovery of economic activity and mobility.
  • Supply dynamics: KAPSARC notes that the main supply challenge will be to balance the market in an orderly and gradual manner, especially given the large overhang of spare production capacity now held by OPEC+ countries.
  • Capex cuts: Oil and gas companies have reduced capital investment and expenditures by almost 30% last year—deeper drops than those seen during the price crisis of 2014—and an additional 20% decrease is expected to come in 2021. The low levels of oil and gas capex investment raises concerns that considerably higher investment is needed by the end of the decade to avoid a longer-term supply deficit.
  • Energy transition: The share of renewables as a percentage of total capex for large EU oil companies (BP, Equinor, Total, Shell, ENI, Repsol and Galp) almost tripled in 2020, as compared with 2019 levels. Some NOCs have started to invest as well, but not to the extent of IOCs. This reflects how the oil industry is prioritising investments during difficult times, with abrupt oil and gas capex cuts and only some reductions in renewable investments.

Download the full report for key findings from the quarterly KAPSARC Oil Market Outlook and more insights into the future of oil.

         

SIEW 2020 Sponsors

sembcorp

SIEW Thinktank Roundtables Sponsor

spgroup

SIEW Smart Energy Sponsor

pavillion

Singapore Energy Summit Panel Sponsor

jera

SIEW Registration and Lanyard Sponsor

sarawak.logo

Singapore Energy Summit Special Session Sponsor

shell

Singapore Energy Summit Panel Sponsor

daigas

SIEW VIP Meeting Sponsor

siemens

SIEW Virtual Platform Sponsor

edf

Singapore Energy Summit Special Session Sponsor

astar

SIEW Partner (R&D)

accenture

SIEW Content Partner

engie

SIEW Energy Insights partner

mitsubishi

SIEW On-demand Sponsor

SLNG

SIEW Sponsor

senoko

SIEW Sponsor

tuas

SIEW Sponsor

sbc

SIEW Energy Showcase Sponsor

bmw

SIEW Official Car Sponsor

Hidden Heading

Held in

Singapore logo

Organised by

FA_EMA20th_Colour on white BG (RGB)

In Support Of

SGT_Master Logo_Horizontal_4C_CMYK