The COVID-19 pandemic has been particularly tough on the oil industry, and it appears as though the impacts will be felt well beyond the immediate future. According to BloombergNEF, peak fuel demand will come sooner than previously predicted, with gasoline demand peaking in 2030 and on road diesel demand peaking shortly after in 2033. While there are other factors in play, COVID-19 certainly appears to be expediting the process.
According to a global energy industry forecast, oil growth will continue to soar until the 2030’s and climate-damaging emissions will keep climbing until at least 2040. The World Energy Outlook is not only closely watched by the oil industry but also the governments due to its relevance to climate policy. The International Energy Agency said that almost 20% of the growth in last year’s global energy use was “due to hotter summers pushing up demand for cooling and cold snaps leading to higher heating needs.” The Internation Energy Agency (IEA) forecast global oil demand to be 106.4 million barrels per day by 2040 (up from 96.9 million last year).
After the recent attacks on the oil processing facilities in Saudi Arabia, demand for spot crude oil has risen. Russian oil demand has been very strong in the Asian market as a result of it. With recent U.S. sanctions on Chinese cargo ships, freight rates have spiked on tankers in the Pacific. This has prompted the Asian market to bid on freight that ship shorter distances, making the option of Russian crude oil more desirable.
There is a new land grab in the Permian Basin that may ease the bottlenecks of oil producers in the west Texas region. Oil Producers pump frac sand and other materials into wells to break up shale rock in order to produce oil. These wells are getting longer and wider which increases the amount of sand used. The need for frac sand is increasing as U.S. rig counts hover above 1,000 nationwide.