STORY - Penalized by the pandemic, demand for crude will grow less than expected and will peak before 2030.

2020, annus horribilis for the global economy and for oil. The barrel of Brent lost three quarters of its value between January and April, falling from 69 to 18 dollars before rising in recent days above 50 dollars. The quarantine of the United Kingdom because of a new variant of the virus, however, made prices unscrew on Monday, which lost at midday, more than 5%, to 49.50 dollars.

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During the first confinement, at the end of April, the American benchmark, the WTI, plunged squarely into negative territory, at almost -38 dollars a barrel. The Covid-19 pandemic is of course at the origin of these tremors. Containment measures and the global paralysis of the economy, with an almost total shutdown of transport and industry, have led to a recession and an unprecedented decline in demand for black gold. At the end of 2019, global crude consumption was expected to increase from 100 million barrels per day (mbd) to 101.5 million in 2020. Ultimately, demand fell this year to around 92 million barrels per day, estimates the International Energy Agency (IEA).

Between a fierce price war, bets on crude storage capacity and serial bankruptcies among American shale oil producers, there have been many twists and turns. At the beginning of March, Saudi Arabia, the world's largest exporter, disappointed at not having convinced its allies, in particular Russia, to reduce production in order to limit the fall in prices, decided to explode its exports by opening its floodgates and slashing prices.

Growth of renewables

Enough to harm the enemy, namely the American producers of shale oil, with higher production costs. And also to worry the Russian ally. The Wahhabi kingdom bet was “very risky, it required nerves of steel. But it was effective. On April 12, Moscow rallied to the Saudi strategy, accepting drastic measures, more severe than those envisaged a month before, i.e. production reductions of 9.7 mbd in May and June”, explains Francis Perrin, director research at Iris. “The OPEC+ cartel, in particular its two dominant players, Saudi Arabia and Russia, has shown its desire to control its market shares and eliminate potential competitors”, adds Antoine Rostand, president of the company. specialized Kayrros.

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Meanwhile, the gap between low consumption and abundant production had saturated global storage capacities. On April 20, WTI futures contracts listed in New York became negative for two days, due to a lack of available reservoirs in Cushing, the small town in Oklahoma where the barrels used as a reference for these contracts are stored. And, all over the world, many tankers have been transformed into floating tanks, fueling the escalation in the rental prices of these boats, which have soared from 10,000 to 150,000 dollars a day.

Decline in demand

Since November, buoyed by hopes of vaccines against Covid-19 and the recovery in Asia, the price of crude has been rising. In 2021, the IMF expects global growth of 5.2%, after a decline of 4.4% this year. But the rebound in demand will not exceed 5.7 mbd next year, predicts the IEA. The new coronavirus has seized up the oil circuit. Unlike black gold, renewable energies have been driven by the pandemic. “We will return to a different economy,” warned Jerome Powell, president of the Fed, the American central bank, in mid-November. A third of the drop in crude consumption will come from behavioral changes, with in particular the increase in teleworking and the reduction in transport, forecasts the oil group BP. Covid-19 has accelerated the ongoing transformation in the use of energy. The automobile sector, the most oil-consuming sector, will return to its pre-crisis level, but it will probably never exceed it, weakened by the rise in power of electric cars, predicts the IEA. Air, where attendance plunged 90% in April and crude consumption by 40% over the whole year, should not return to its previous level until 2024.

In the long term, the outlook for the oil sector is no better. Whereas a year ago, the IEA and OPEC forecast consumption of 106 to 110 mbd by 2040, the IEA now estimates that demand will never exceed 104 mbd. For its part, BP forecasts a peak in consumption of black gold which would take place no later than 2030 and would be followed by a decline in demand reaching, according to the scenarios, 8% to 45% by 2050.