World oil demand will grow again in 2010 and should be back to its pre-recession levels by 2012, according to IHS-CERA, a quicker turn-around than past busts but still a few years off.
IHS CERA expects oil demand growth to resume by 900,000 barrels per day (bd) in 2010 and return to its 2007 high of 86.5 million barrels per day (mbd) by 2012–a five year turnaround.
The International Energy Agency made a similar prediction this week, estimating consumption would be up of 1.4 million barrels a day in 2010. But the head of IEA tells Platt’s it’s still hard to tell if the demand growth in China is for real.
Oil demand peaked in 2007 at 86.5 million barrels per day but has since fallen off to 83.8 mbd. The last time that the world saw such a severe decline in consumption was in the early 1980s and it took nine years for demand to return to the 1979 pre-recession high, according to CERA. “A five year turnaround–while still a substantial amount of time–would be swift in comparison,” the group said.
The big differences between the 1980s and now is the strength of emerging markets like China and India, andfewer options for substituting one fuel for another globally, said IHS CERA global oil managing director, Jim Burkhard.
“In the 1980’s the largest area of the demand decline came from power generation, where oil was replaced by readily available substitutes like coal, gas or nuclear,” Mr. Burkhard said. “Today, global demand growth is coming from the transportation sector in emerging markets where there are fewer large-scale options for switching fuels.”
By 2014 CERA expects demand to equal 89.1 mbd, with 83 percent coming from developing countries. China alone is expected to account for 1.6 mbd of cumulative growth. Just 900,000 bpd of growth is expected to come from OECD countries.