Wood Mackenzie analysts on what we must always count on in vitality within the coming 12 months, from oil markets to photo voltaic prices and coal exports to EVs.
This article explores the 10 predictions from Wood Mackenzie analysts about what to anticipate in 2021 and one further thought for the extra distant future:
1) Strong oil demand progress will carry costs
With the Pfizer-BioNTech Covid-19 vaccine starting to make its means the UK and US in mid-December, we count on coronavirus-related shutdowns to begin easing within the first quarter of subsequent 12 months. Our forecast is for world oil demand to extend 6.6 million barrels per day year-on-year in 2021, reversing about two-thirds of the almost 10 million b/d collapse in 2020.
Already, China has seen oil demand strengthen this quarter to ranges greater than the identical interval of 2019. The turnaround in China’s oil demand factors to the primary signal of what’s going to quickly be a actuality: brisk international year-on-year demand progress in 2021. That development goes to tighten the availability and demand stability by the second half of 2021 and help oil costs.
Ann-Louise Hittle, head of Macro Oils
2) The upstream oil and fuel sector will spend one other 12 months within the doldrums, whilst costs rise
Investment ranges within the upstream sector will keep flat at about US$300 billion in 2021. Reactions to cost indicators will likely be uneven; low costs imply fast cuts, however at greater costs contingency and resilience will outweigh enthusiasm to make the most of a nadir in service sector prices.
Projects will more and more be judged on their environmental, social and company governance (ESG) credentials. We count on 20 or so large initiatives to be sanctioned in 2021, up from simply over 10 in 2020, however simply half the prevailing pre-pandemic development. The class of 2020 won’t all be low-carbon, low-cost trailblazers. But the course of journey is one-way when it comes to business stakeholder aspirations.
Fraser McKay, head of Upstream Analysis
See our tales on how LNG is reshaping the facility era sector
three) Oil and fuel firms’ diversification into low-carbon vitality will speed up…
The European majors have already laid out their zero-carbon progress aspirations. They will put extra meat on the bone in 2021, persevering with to construct the inspiration of a net-zero trajectory by investing in low-carbon applied sciences. The change in US administration, the looming COP26 and shifting stakeholder sentiment will ratchet up the stress on different IOCs and NOCs to observe their lead.
Tom Ellacott, senior vice-president, Corporate Research
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four)…and extra firms will set targets for reducing emissions
In an indication of how investor stress on local weather change is ramping up, this month a gaggle of 30 fund managers with US$9 trillion below administration dedicated to work in direction of a aim of getting net-zero emissions throughout their portfolios by 2050. They additionally pledged to set intermediate targets for 2030 per limiting international warming to 1.5°C. Early subsequent 12 months, regulators within the EU and the UK will begin pushing listed firms to undertake the suggestions of the Task Force on Climate-Related Financial Disclosures for speaking about their emissions and local weather dangers. The mixed stress from buyers and regulators will imply extra firms making commitments on emissions, and extra firms with long-term ambitions setting medium-term intermediate targets.
Valentina Kretzschmar, vice-president, Corporate Research
5) There will likely be a blockbuster deal in US tight oil
All the items required for mega-consolidation are in place. Financially robust firms can exploit their advantageous value of capital. Smart offers can decrease upkeep capital necessities. And mergers that introduce diversification supply much-needed risk-mitigation to tight oil companies. As a consequence, we predict we are going to see a…