Wood Mackenzie warn of doomsday for oil industry, $10-18/b by 2050

London (Quantum Commodity Intelligence) - Increased focus on climate action policies, adoption of rapid electrification in transport and decarbonisation of the power sector could see global oil demand peaking as early as 2023, according to a study by the commodity research firm Wood Mackenzie.

The pace of decline would ramp up to year-on-year falls of 2 million b/d to leave the world consuming just 35 million b/d of oil by 2050.

The drop in oil demand will also see a drop in price, with Brent averaging $40/b by 2030, and then falling as low as $10 to $18/b by 2050, said the report.

"If the world cranks up its efforts to limit global warming to 2 degrees centigrade, the consequences for the oil and gas industry will be severe," the report warns.

Under an accelerated energy transition, the energy markets would be progressively electrified and the most polluting hydrocarbons squeezed out.

Wood Mackenzie estimates electricity will comprise 47% of all energy consumption by 2050 compared to 20% today.

The global power sector is also expected to be heavily decarbonised by switching to renewables and away from coal to gas, alongside widespread uptake of carbon capture and storage.  

"No oil company is prepared for the scale of change envisioned," Wood Mackenzie warned.

Should this scenario manifest, the sector will see "asset impairments and bankruptcy or restructuring on a scale far greater than that of 2020."