By Rhodri Morgan
Fossil fuel demand will peak above prevailing international estimates, the head of one of Europe’s largest oil producers has predicted, extending well into the next decade.
International Energy Agency director Fatih Birol said in September last year that the “relentless growth” of the major fossil fuels would end this decade as the world prioritised electrification.
But Russell Hardy, chief executive of Dutch firm Vitol today said the IEA’s prediction of oil demand reaching its peak in 2030 reflected the state of the market months ago and that landscape has already changed.
“We agreed with that view 12-24 months ago, but we are of the view now that the pace of change is more challenging so it is likely to drift into the early 2030s,” he told London’s International Energy Week conference.
Hardy’s view is that this demand extension would likely be driven by countries not within the Organisation for Economic Cooperation and Development (OECD) like China and India, where Hardy said there is, “a lot of coal demand” to displace as both countries continue to hike fossil fuel usage and infrastructure development.
“It’s our feeling that oil demand has probably got a good few number of years still where it climbs before it plateaus as the non-OECD side keeps growing as OECD begins to prioritise electrification,” he said.
Regarding the current markets, Hardy says the ongoing conflicts in the Eastern part of the globe have not moved the market towards significantly greater distress.
“The oil markets are a lot less fragile than things were a few years ago, the Russian sanctions have been absorbed and life is more complicated for Europe as our products have to come much further,” he said.
Due to the raft of measures instituted by the G7, Europe has effectively pushed Russian fossil fuel products to Asia, but have had to seek replacement product lines from Asia to replace those products and that, according to Hardy, is the main place where petrogiants are “feeling the strain.”
“But the crude price has been between $81 (£63) and $91 (£71.6) since November 2022 – you can reflect and say the market is doing a good job of controlling these risks,” he added.
The paradigm on gas, meanwhile, has shifted on the back of historically-strong European stockpiling and U.S supply lines, Hardy contends.
“Gas has been most volatile over past few years and we’ve seemingly got out of that now, we’ve gone from trying to discourage demand over last two years to trying to trying to find homes for it,” he said.
