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Peak demand? More like a supply crisis propelling oil to US$100


The world stands on the cusp of an oil supply crisis. Years of insufficient investment in offshore mega-projects combined with the end of U.S. shale hyper growth and a recent shift by global supermajors to preferentially invest in alternative energy over traditional hydrocarbons have resulted in an oil industry that lacks the ability to meaningfully grow its production in the years ahead.

Why does this matter when we read headlines every day prophesizing the end of oil due to the imminent mass adoption of alternatives such as hydrogen and electric cars?

This is our energy reality: the world is nowhere near peak oil demand. Global population growth of 1.2 billion people over the next 20 years combined with decades’ long runway for alternatives to reach critical scale mean that oil demand will grow for years to come.

Yet, the delusion of imminent peak oil demand is having a profound impact on the willingness of companies to invest today in large, extremely expensive projects that often take four to six years to come onstream and a further four years to recoup initial investment.

How can a CEO justify sanctioning a multi-billion dollar project that takes 10 years to reach payout when the demand outlook a decade from now is so uncertain? The fear of peak demand is leading to the reality of peak supply.

As a result of seven years of falling investment and given the hugely capital intensive nature of the oil business, global offshore production (about 1 in 4 barrels produced) has now entered a period where new projects cannot offset existing declines and at best production will stay flat for the next several years.

This significant loss of future capacity means the burden falls on U.S. shale and OPEC to satisfy demand growth, yet the ability of either to do so is hugely challenged.

While U.S. shale basins have in recent years acted as the global swing producer, the era of U.S. shale hyper growth is over. The failed experiment of unbridled spending due to unlimited access to external capital resulted in the incineration of hundreds of billions of dollars of shareholder equity and a subsequent investor-led change to shale companies’ very ethos.

The old model of massively outspending cashflow and chasing growth has evolved to underspending, which has led to the return of capital back to investors in the form of dividends and share buybacks. This profound change, combined with the depletion of much of the higher quality drilling inventory means that the future growth rate of U.S. shale will be a fraction of years past.

Why is this a watershed event for the oil market? Were it not for the rise of U.S. shale over the past 5 years, non-OPEC production would have been flat, while global demand grew by 6 million barrels per day. With no global offshore growth and U.S. shale at best meeting half of future demand growth, the remaining burden is squarely placed upon OPEC’s shoulders.

Yet, OPEC countries whose very ability to remain going concerns and satisfy their sovereign needs have struggled for years with insufficient revenue due to weak oil prices. Many had to deplete foreign exchange reserves, sell off stakes in crown corporations, and cut social spending, thereby risking regime change due to the violation of the unspoken social contract with their populaces. The least attractive use of scarce capital was investment in new oil productive capacity, especially in an era of low oil prices.

While the market is currently concerned with the eventual return of the near 6 million barrels per day of voluntarily curtailed OPEC production, given the stronger-than-expected rebound in global oil demand these volumes will be easily returned without disrupting oil balances by early 2022.

As a result of sovereign needs superseding the investment in new capacity once this curtailed production returns, OPEC will exhaust its spare capacity and lack the ability to significantly grow in the years ahead. I believe this milestone will rival the importance of the end of U.S. shale hyper growth and will mark the beginning of the multi-year oil bull market.

Source: Financial Post hellenicshippingnews

16 Comments on "Peak demand? More like a supply crisis propelling oil to US$100"

  1. ItIsTimeForWhiteManToSeeTheTruth on Mon, 17th May 2021 10:09 am 

    It is amazing how women, the government of Canada/reptilians/Quebec, negro, shit brown diversity and Indigenous people are constantly mocking the Whites man. Maybe it is time for the White man to stop participation to this civilization. No reason to help people that don’t appreciate us. Let them deal with peak oil on their own.

  2. Cloggie on Mon, 17th May 2021 10:19 am 

    A retired Audi engineer retrofitted a car to make it run on a methanol fuel cell, with a range of at least 800 km, breating new life into George Olah’s methanol economy:

    “800 km Range with Methanol Fuel Cell”

    Methanol is a simple liquid and is much easier to handle than hydrogen.

    For the eternal skeptics here: methanol can be used almost anywhere, where gasoline is used, just like hydrogen. Not that skeptics will ever pick this up. Reassuring thought, one competitor less on world markets.

  3. Cloggie on Mon, 17th May 2021 10:40 am 

    The UK-German consultancy Aurora has identified a global electrolyser project pipeline of 213 GW, until 2040. 85% of that is in Europe:

    This is the direct result of owning a coherent renewable energy policy.

  4. ItIsTimeForWhiteManToSeeTheTruth on Mon, 17th May 2021 11:20 am 

    you might like this, especially the first 15 min of this video. It is about Trump. I don’t know if it is true and not because the mass medias and the internet belong to the devil. The devil use lie and deception to rule over earth. You decide if it is true of not.

  5. Biden's hairplug on Wed, 19th May 2021 6:40 am 

    Yesterday, the Eurovision first half final in Rotterdam, the Netherlands. The final on Saturday will be the most watched tv event in the world, as per usual (200+ million). In 2022, Eurovision btw will start to conquer America and set up a similar event there. What do you mean, Europe returning to North-America?

    Personally I liked the interval act the best, this was the first time that global warming and rising sea levels were a theme in pop music, as far as I know:

    The act was a mixture of Dutch maritime product placement, Dutch relationship with water and warning against global catastrophe. I found this act the best of the entire show, but that’s probably because I’m a chauvinistic pig.

    Here, the complete event:

  6. Cloggie on Wed, 19th May 2021 2:24 pm 

    Global car industry preparing to switch to solid state batteries:


    – rapid charging (15 minutes)
    – double energy density, leading to less weight and increased range
    – slow aging, lifespan longer than car
    – lower cost

    Bye-bye gasoline car, bye-bye oil companies.

  7. Harquebus on Wed, 19th May 2021 3:20 pm 

    Cars, gasoline and methanol. Ha!
    Only when one can replace diesel fuel can one brag about an alternative energy future.

  8. makati1 on Wed, 19th May 2021 4:07 pm 

    Harquebus, you are correct. Diesel runs the world economy and transportation. The Filipinos have it correct. In Amerika, the last time I checked, diesel was more expensive than gasoline by about a dollar a gallon. Here, in the Ps, it is cheaper by about a dollar. A battery big enough to power a 40+ ton tractor trailer across the thousand miles plus of the US Midwest, would take half the truck’s load. Space and weight.

    Now enters Cloggie/Biden’s with some bullshit about new batteries that can be produced by the millions per year. Not factoring in the billion plus vehicles that would take decades to build and to replace exiting FF vehicles. It will never happen, but Cloggie never thinks about reality.

    BTW: Cloggie, where are the materials for those billion plus batteries to come from and how much FF energy does it take to make them?

    Cloggie and his techie authors are all in a huge, fantasy, circle-jerk. LOL

  9. Cloggie on Thu, 20th May 2021 3:15 am 

    “Harquebus, you are correct. Diesel runs the world economy and transportation.”

    But not tomorrow, it won’t.

    So what you are you going to do about it?

    Gloating about seeing the world go under with “beer and popcorn”, is not an option. You can only gloat while you still live on the goodies of the West, for as long as it lasts. Won’t be long.

    “Now enters Cloggie/Biden’s with some bullshit about new batteries that can be produced by the millions per year.”

    I never predicted that we are going to replace 1 billion gasoline cars with 1 billion e-vehicles.

    What I DO predict is the end of private car ownership for the masses by 2030.

    And if we are lucky, and I think we will be, we can replace the privately owned car by turning our highway systems into virtual railway lines, with cheap automated driving. Just take the inner city bus to a platform near the highway, outside the city, order a Ford Transit or VW Moia…

    … via your mobile phone and see the designated vehicle approaching on your phone screen. That’s it. No 1 billion cars, but perhaps 50 million of these vehicles, world-wide. We have resources for that.

  10. makati1 on Thu, 20th May 2021 5:24 am 

    Yes it will Clogged brain. I’m going to go on as usual and enjoy the benefits of a modern lifestyle for the rest of my life, hopefully another decade or two, like most other humans on this planet. The ongoing series “End of the West” is up next. Stay tuned. Pass the San Mig Lite and beer pretzels.

    And your prediction is as phony as your so called education. Electric highways were promised back in the 70s. How many do you see today, 50 years later? Bullshit promoted by the greedy to take fool’s money, nothing else. Even that fat fool, Musk, cannot make a car that doesn’t kill people while in “self drive” mode. How long do you think insurance companies are going to insure them? NO insurance, no car.

    When the Taiwan war starts, the electronic parts for cars, etc., will evaporate. A little flu took the chip industry into the black hole until 2023 or later. Techie flu! 50 million self driving cars? LMAO!

    BTW: Are you also sucking on that “reset” Koolaid? Sounds like it. 2030. Hahahaha!

  11. Biden's hairplug on Thu, 20th May 2021 7:15 am 

    “The ongoing series “End of the West” is up next.”

    Correction: the end of the US-led West is next:

    “Major of Chicago only wants to talk to journalists of color”

    This black fool should be careful with what to wish for, because soon he might be deprived of meeting any white person in the first place. This punk thinks America is forever, but he could be majestically mistaken and end up in a miserable Haiti-2.0 before he can say “Hitler”. These are unmistakable signs that the US is entering its Final Phase, the Grand Finale, if you will.

    Here, the history of the US in a few minutes:

    The borders are changing continuously.

    The only thing surprising is that the US kept its current borders for so long, but the end of that state of affairs is in sight.

    An America that will sink away into chaos, à la Russia-1917, will be an easy prey for foreigners. In 1918, the entire world was recovering from WW1 and hardly intervened in Russia. In 2021, not so much.

    Now we have a continental Europe (EU + Russia) with over 2 million soldiers and the Chinese “Liberation” Army, with over 1 million soldiers. They both will be vying for new spheres of influence in a collapsing North-America. The Europeans will be siding with the Patriots, where the Chinese will team up with the woke libtards. Sleepy Joe is known as Beijing Biden for a reason.

    “Yes it will Clogged brain. I’m going to go on as usual and enjoy the benefits of a modern lifestyle for the rest of my life, hopefully another decade or two, like most other humans on this planet”

    No you fool, you will end up in a Chinese labor camp, next to Uighurs and assemble solar panels for the European transition effort, after China has incorporated the Philippines into its empire, after the US collapses.

    American POWs Philippines, 1945.
    Could be makati in 202x.

    “When the Taiwan war starts, the electronic parts for cars, etc., will evaporate. A little flu took the chip industry into the black hole until 2023 or later. Techie flu! 50 million self driving cars? LMAO!”

    Taiwan and the rest of the world is for 100% dependent on Dutch ASML for the real micro-chips technology. WE have the tech, not the chinks:

    Without our (Dutch) ongoing support, these complex machines will break-down within a year, all over the world: in Taiwan, in Korea, in China, in the US, everywhere. We can send the entire world back into the industrial Stone Age, if we wanted too:

    “How ASML became chipmaking’s biggest monopoly”

    “How ASML secured the Dutch a place at the table for tech superpowers”

    With all due respect for the economic achievements of China, it is Europe that is still on top with everything: IT, cars, trains, planes, renewable energy, high quality food, the lot.

  12. makati1 on Thu, 20th May 2021 7:40 am 

    Cloggie, the entire EU, UK, Australia and the US is going down the shitter, if you follow current events. That includes the Netherlands.

    Your Eurocentric view of the world is warped, like your view of the techie future. LOL

  13. Cloggie on Thu, 20th May 2021 12:38 pm 

    “Cloggie, the entire EU, UK, Australia and the US is going down the shitter, if you follow current events. That includes the Netherlands.”

    I follow current events and I live in the EU, so I know very well what is happening here.

    Now tell me what that juvenile expression: “in the shitter” means in practice, for the EU.

    In the EU we’re richer than ever and have a vision for the future that is carried by the vast majority of the population.

    I think you are making things up.

  14. makati1 on Thu, 20th May 2021 4:42 pm 

    Cloggie, if you only rely on the propaganda called “news” in the West, you are just brainwashed. The EU is going down the shitter.

    You cannot support yourselves in any practical way. You have idiots running your countries, or should I call them tribal centers? You are all Amerikan ass kissers and follow, like sheep, the dementia patient’s decrees. The elite rule your countries, not your ‘elected’ idiots. You are already socialist serfs. Next stop, communism. Wait for it. Baaaaahhhh~ LOL

  15. Cloggie on Fri, 21st May 2021 2:28 am 

    “You cannot support yourselves in any practical way.”

    Explain? Complete BS:

    “You are all Amerikan ass kissers and follow, like sheep, the dementia patient’s decrees.”

    Not anymore. Just like China, Europe is in anticipation of the US retreating from pole position. We in Europe are going to complete Nordstream 2, AGAINST US objections. And the “US ass kissers” know they can take over from the US:

    ‘US losing world leadership, Europe can replace it’ – EU top diplomat Mogherini

    The US is no longer strong enough to enforce its will.

    “You are already socialist serfs. Next stop, communism. Wait for it. Baaaaahhhh~ LOL

    In Europe, we have only one real problem: mass media promoted mass immigration, instructed by the US, just like all the media in Eastern Europe until 1989 followed the Moscow party line. But I’m telling you, we are heading for our own 1989 and Americans are going to be booted out of Eurasia everywhere… because your country is facing collapse, because of:

    1. failing to achieve global integration (“NWO”, the hidden purpose of the US since WW1, after the youknowwho took over)
    2. irreconcilable ethnic strife
    3. failing to respond to the upcoming fossil fuel supply crisis in an adequate way (“yabut, hydrogen is not a source of energy”.lol)

    Europe is the pinnacle of human civilization, always has been, until a sinister tribe from the Ukraine area took over the white trash areas (USA, USSR), set it up against Europe, won and for less than a century could hope that the world could be brought under control from a single capital (Moscow, Washington resp.), in the pockets of the youknowwho. Nice try, I have to admit admiring the effort, they certainly deserve a state funeral.

    But they are going to be buried regardless and your kind with it, makati. Time is up and your windfall empire is over. White America will need to reinvent itself, on a much more modest footing… under our guidance, if you are so lucky and can escape the terrible fate of having to live in a woke neo-USSR-of-color, still under kosher control, because you are too lame to do anything about it.

  16. James Willey on Tue, 25th May 2021 5:26 am 

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