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OTHER NEWS 26 Apr 2016

Oil Market Futures: Forecasting oil demand in transport up to 2050

22 APRIL 2016: Oil Market Futures by Pöyry Management Consulting, Cambridge Econometrics and the International Council on Clean Transportation (ICCT) presents the long-term impact on the oil price and the wider economy if climate policies are implemented in the transport sector. The results show that additional technology-forcing policies would lead to a significantly lower demand for oil from transport saving a cumulative 260 billion barrels of oil between now and 2050.

Following the COP21 summit, governments will increasingly start cutting carbon emissions from transport as part of the global effort to tackle climate change. To assess the impact of these policies, The European Climate Foundation published new research that explored how policies intended to drive investment in low-carbon technologies will impact the trajectory of oil prices over the coming 35 years. The analysis found that policies are likely to lead to lower oil prices.

The results show that demand for oil from transport would drop by 11 million barrels per day in 2030 and by 60 million barrels per day in 2050. This lower oil demand would result in oil prices stabilizing between $83 and $87 per barrel in the long run, rather than increasing to $90 per barrel by 2030 and over $130 per barrel by 2050 (in 2014 prices), as projected in the business-as-usual scenario. As a result, the European economy would benefit from reduced spending on oil, leading to net macroeconomic benefits.

Gareth Davies, Director at Pöyry Management Consulting, said, "The rise of shale oil, the slowing world economy and OPEC’s changed production policy have led to unprecedented levels of oversupply in global oil markets. Our central view is this oversupply will unwind and prices will return to around $80/barrel by 2020. In a business-as-usual scenario prices would continue to rise after 2020, however aggressive climate policies could deliver oil demand reductions that would hold prices at this level."

Additional information by:

Metin Parlak
H+K Strategies

+44 207 413 3771

About Pöyry

Pöyry is an international consulting and engineering company. We serve clients globally across the energy and industrial sectors and provide local services in our core markets. We deliver management consulting and engineering services, underpinned by strong project implementation capability and expertise. Our focus sectors are power generation, transmission & distribution, forest industry, chemicals & biorefining, mining & metals, transportation and water. Pöyry has an extensive local office network employing about 6,000 experts. Pöyry’s net sales in 2015 were EUR 575 million and the company’s shares are quoted on Nasdaq Helsinki (Pöyry PLC: POY1V).