CRU: Long-Term Oil—Has Covid-19 Brought Forward Peak Oil Demand?

By CRU Senior Cost Economist Ross Cunningham, from CRU’s Steelmaking Raw Materials Monitor

The Brent crude price is often deemed a bellwether for the global economy. A high oil price increases inflation and impacts economic growth. It influences global confidence, affects investment decisions and weighs on exchange rates—particularly those of large oil exporters. In the long-term our view is that peak oil demand will occur sometime in the mid-2030s. Technological efficiencies, the uptake of renewable energy, carbon tax schemes and electric vehicle (EV) penetration in the car market will be the main drivers of demand falling year on year at that time. Undoubtedly, the unprecedented impact of Covid-19 has changed the way we work, live and do business. Will these changes become a mainstay and have enough of an impact on the oil market to bring forward peak oil demand? This Special Feature sets out our view on long-term oil, the fundamental drivers of our price forecast and whether these have changed enough to alter our view.