Looking back in history up to the 1970s, she said oil demand has declined only four times: twice in the ‘70s, during the Arab oil embargo and in the aftermath of the Iranian Revolution; once in 2008-2009, the great financial crisis; and again in 2020, when demand for oil collapsed as the COVID pandemic entered the global scene.
“In April 2020, during COVID, 97% of global industrial production was shut. None of us were traveling,” Sen said. “Yet oil demand only fell by 20%, about 20 million barrels per day, to 80 million barrels per day.”
Other than those periods of decline, she said, the world’s thirst for oil has managed to rise even in the face of the ’97 Asian economic crisis, the early 2000s dot-com bubble, and the gloomy years of 2011-2014 in Europe. She estimated that every year, demand has always grown by more than a million barrels per day.
On the supply side, Sen projected that by the end of this year, OPEC’s production capacity will represent less than 1% of global oil demand. That number is short of the 5% buffer she suggested is necessary to safely account for outages that tend to occur in politically unstable oil-producing regions.
“We called for $100-plus oil prices between 2023 and 2026, pretty much from 2018 onwards,” she said. “That was absolutely based on underinvestment [in oil producing capacity].”
