World oil market: The pandemics will bring global peak oil demand closer

Abstract

The global economic crisis triggered in 2020 by the coronavirus pandemics necessitates more thorough analysis of the scholar concept of the global peak oil demand taking into account the newest data and facts. The present article articulates the thesis that under the influence of the process unleashed by the crisis and the pandemics the world economy will reach the peak demand for oil sooner than it was supposed earlier. The author highlights the two main contributing factors: first, changes in the behavior of mass consumers and producers; second, the acceleration of digitalization of business processes in corporate sector. Both factors lead to decrease in demand for transport mobility, еspecially in aviation and to a lesser extent in road transport. The unfolding restructuring of the established model of globalization, first of all trade wars and intensifying shifts in global value-added chains through reshoring and increasing emphasis on self-sufficiency and import substitution will also exercise downward pressure on oil demand globally. Basing on the analysis of shifts in energy and climate policies in the main world centers of production and consumption after the pandemics the conclusion is made that dynamic of future demand for oil crucially depends on the consistency of state policies supporting oil substitutes in transport sector and promotion of new energy sources. It is shown that European Union and China critically dependent on oil imports will continue to promote oil substitutes, primarily through encouraging road transport electrification. The USA richly endowed with hydrocarbons could temporarily slow down substitution of oil with alternative energy sources. The article concludes that the long-term tendency towards weakening of world economic growth upon oil consumption will accelerate.