The impact of the epidemic on the oil industry may continue

The outbreak continuation of the COVID-19 of petroleum additives undoubtedly brought severe impact to the global oil industry this year. The sudden decline rebound in oil demand have caused drastic fluctuations in global oil inventory oil prices, the large-scale production reduction agreement has helped temporarily stabilize oil prices.

At first, industry insiders expected global oil demand to return to pre pandemic levels within a year two. Now it seems that this view is too optimistic. The epidemic will also have an impact on decision-makers' awareness of the urgency of energy climate change, energy policies, technology, investment in various countries. Moreover, this impact is long-term is currently in the process of development.

The impact of the epidemic on the energy system will continue for many years, Brent oil prices will reach the level of $50 per barrel until 2023. If policies goals of various countries are successfully implemented, global energy demand will also return to pre pandemic levels by early 2023. If the epidemic continues the decline deepens, this time point will be postponed to 2025.

The era of global oil demand growth will come to an end in the next 10 years. However, due to the lack of significant policy changes by the government, there are currently no signs of a rapid decline in oil demand.

Petroleum additives

The epidemic will have a significant negative impact on the economic growth prospects of the OECD, with oil demand expected to reach a high of 47 million barrels per day 2022 to 2025 gradually decline thereafter. This means that the oil demand of OECD countries may return to the level of 47.9 million barrels per day in 2019. The significant reduction in investment growth will increase the risk of future market fluctuations.

If upstream oil companies adjust their investment direction based on the trend of energy transformation the judgment of oil demand peaking, then the oil industry may experience a situation similar to "prophecy self realization". In addition, investors are also voting with their feet, putting external pressure on oil companies.

As for the future energy demand, the International Energy Agency believes that renewable energy will play a leading role in the four development scenarios it has set, while solar energy is on the stage, the cost advantage over coal gas power is an important driving factor.