The oil demand worldwide is expected to reach 100 million bpd by the end of the decade, notwithstanding the ongoing Covid-19 pandemic and energy transition, according to the CEO of Adnoc, UAE’s state-owned oil company. The decline in oil demand this year to 9.8 million bpd is attributed to coronavirus pandemic induced disruption in the market, with the demand predicted to recover by 6.5 million bpd in 2021.
The oil production in Libya crossed one million bpd, a huge achievement considering the North African nation’s energy industry was virtually shut down following the civil war. The OPEC member increased its output in the last six weeks and hit one million bpd last week for the first time in ten months. The increase in oil production, however, raised concerns among oil traders as second wave of Covid-19 cases across Europe and the US are projected to lead to lower energy use.
The second wave of coronavirus cases, which has led to reimposing of lockdown in Europe, is expected to reduce oil demand although the severity of the lockdown is expected to be lesser than the one imposed in March. After witnessing a collapse earlier in the year, oil prices are currently at roughly $40 per barrel, but the market is facing uncertainty in view of legal complications of the US election.
The OPEC+ deal on oil production cuts may be tweaked again after being adjusted previously, subject to consensus among all the group members. The present production cuts agreed upon by the group are at 7.7 million bpd, even as analysts estimate that mobility curbs to contain coronavirus cases could force OPEC and allies to refrain from increasing supply. OPEC+ is contemplating extending the current output cuts by a period of six months.