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The world may never consume more oil than in 2019, BP says

September 14, 2020. Summarized by summa-bot.

Pump jacks are shown in an oil field, Wednesday, July 29, 2020, in Midland, Texas. (AP Photo/Tony Gutierrez)

Demand for oil may have peaked last year, according to BP, which says the global market for crude might never recover from the coronavirus pandemic.

London (CNN Business)Demand for oil may have peaked last year, according to BP, which says the global market for crude might never recover from the coronavirus pandemic.

In a new report published on Monday, the company lays out three scenarios for energy demand, all of which forecast a decline in demand for oil over the next 30 years.

In a "business-as-usual" scenario, in which government policies and social preferences evolve in the same way as in the recent past, oil demand picks up slightly following the coronavirus hit, but then plateaus around 2025 and starts to decline after 2030.

In two other scenarios, in which governments take more aggressive steps to curb carbon emissions and there are significant shifts in societal behavior, demand for oil never fully recovers from the decline caused by the pandemic.

The new report is a major change from last year, when BP expected growth in oil demand to continue into the 2030s.

Analysts think the crisis will accelerate the shift away from fossil fuels towards renewable forms of energy, particularly as governments and investors heap pressure on companies to tackle the climate crisis amid growing evidence of its devastating effects.

The Organization of the Petroleum Exporting Countries (OPEC) said on Monday that world oil demand is expected to grow at a slower pace in 2021 than it thought a month ago.

Investors demand climate action

This week the company will provide investors with more detail on its new strategy, which involves a 10-fold increase in annual low carbon investments to $5 billion by 2030, when it expects its oil and gas production to have fallen by 40% from 2019 levels.

''As difficult steps go, BP's pirouette from traditional oil company to green energy giant ranks among the more challenging," Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown said in a note to clients.

"The company still produces 2. 6 million barrels of oil a day, and making an abrupt heel-turn away from its core business towards renewables could see investors used to steady returns, leaving their seats and heading for the exit," she added.

"The benchmark will ensure it's clear which companies are acting on climate change as a business-critical issue," Stephanie Pfeifer, CEO of the London-based Institutional Investors Group on Climate Change said in a statement.

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