In 2020, British Petroleum shocked energy markets by announcing that the world had already passed peak oil demand.

Today, that point in time has become a reference to which economic analysts refer to when they talk about the peak of demand for oil in the world, which will undoubtedly redraw the geopolitical maps, and then even "OPEC" may not be able to do anything about it.

In the wake of BP's announcement, and given the company's 2020 energy forecast, CEO Bernard Looney pledged to increase spending on renewable energies 20 times, to reach $ 5 billion annually by In 2030, with no oil exploration in new countries, this announcement was somewhat surprising, given the distinction of "BP" in the pursuit of new oil sites relentlessly.

According to the site, today, when many analysts talk about peak oil, and whenever global demand enters a phase of decline, they always refer to that point in time, which, according to BP, is a point that has already occurred and is over, as demand is expected to decline for Oil has increased by at least 10% in the current decade, and by up to 50% in the next two decades.

From what BP noted, that historically, the demand for energy has always risen steadily with global economic growth, however, the Covid-19 crisis and climate change may have a role in disrupting this rule, which made the company err in its estimates, as it became clear that The epidemic that began more than two years ago has not led to a significant drop in demand.

The site indicated that BP later revised its forecast for global economic growth, in its Energy Outlook for 2022, and said that global gross domestic product will shrink by only 1.5 percent by 2025 from 2019 levels, compared to its previous estimates of 2.5 percent. It justified its earlier bleak view that it was set up before Russia's war on Ukraine drove up energy prices and cast a shadow of uncertainty over Russia's oil and gas sector in recent months.

Possible scenarios

In its latest report, BP presented 3 scenarios, all of which expect oil demand to exceed pre-pandemic levels, by the middle of this decade, before starting to decline to varying degrees, as the scenarios came as follows:

The first scenario:

In the most optimistic case, the company expects that global demand for crude will rise to 101 million barrels per day in 2025 and remain constant until 2030, after which it will begin to decline to reach 98 million barrels per day in 2035 and then 92 million barrels by 2040.

The second scenario:

The company called it “Nat Zero” (zero carbon, a term used in combating climate change that expresses offsetting carbon emissions), which is the most pessimistic due to global ambitions to combat climate change, as it expects demand in 2025 to be at 98 million barrels per day and 75 million barrels by 2035, as it is assumed that a 95% reduction in greenhouse gas emissions must be achieved.

As for the third scenario:

It was called “midway”, BP assumes that the world will remain largely compatible with climate goals by reducing emissions of hot gases by 75% by 2025, which makes the demand for oil, according to this future scenario, 96 million barrels per day in in 2025, and 85 million in 2035.

Nevertheless, recent events in the energy sector indicate that oil companies may be given respite to increase production and even ease climate targets as long as oil and gas prices remain high. Small hedge A battle on its board of directors to get it to reduce its carbon footprint, and he fought it, but Exxon managed to turn the tables and get shareholders on its side.

In this context, a group called "Follow These Activists", which campaigns to reduce carbon emissions, presented a resolution urging faster action to combat climate change, which was supported by only 28 percent of participants.

Another proposal calling for a report on low-carbon business planning garnered just 10.5 percent support, which suggests that Exxon's fossil fuel business remains safe, at least for now, as long as it continues to distribute dividends and bonuses to shareholders.

And the American company "Chevron" followed its approach, as shareholders voted against a resolution demanding the company adopt targets to reduce greenhouse gas emissions, as only 31% of them voted in favor of the resolution, compared to 61% for a similar resolution last year.

change the map

The site continues, noting that in a report published in the "Geopolitical Intelligence Services" blog, Carol Nakhle, CEO of "Christol Energy", says that global oil consumption will peak within the next two decades, but demand does not necessarily decline after that to the lowest levels.

Nakhla indicated - according to the site - that the demand for oil in the OECD countries peaked in 2005 at about 50 million barrels per day, driven at that time by the developing world, especially Asia, mainly China and India, where they are considered, respectively, the second And the third largest consumer of oil in the world after the United States, as well as from the Middle East, and in the first place Saudi Arabia, which is also the sixth largest consumer in the world, while the consumption of countries outside this organization represents 54%.

Nakhleh explained that "after reaching the peak demand for oil, it will stabilize at some point and then begin to decline. This is common in a growing market, but in a decreasing market, an increase in one country's production is offset by a reduction in supply from another country, and this matter is usually subject to price competition. ".

She added that once global demand for oil reaches its peak and begins to decline, competition will intensify among producers to sell more oil and protect their market shares, and in a stagnant or shrinking market, oil and gas producers will face new rules that differ from the usual provisions.

For example, OPEC's strategy of cutting supplies to raise prices, or Russia threatening to cut supplies to pressure to lift sanctions on its oil exports, will not be effective, and to be clear, higher prices will attract additional production as always, but in a shrinking or declining market This will lead to lower prices, and any attempts to cut production to balance prices will be counterproductive.