Oil price may drop to $10 due to electrification of energy and transport – experts

Wood Mackenzie experts expect oil prices to fall as low as $10 a barrel by 2050 if the world succeeds in electrifying the energy sector and fulfils the terms of the Paris Climate Agreement. The oil demand will begin to decline from 2023, High-Tech+ reports.

If heads of the states take drastic action to limit global warming to 2℃ by 2050, as mandated by the Paris Climate Agreement, oil demand will "significantly" decline, according to a report from Wood Mackenzie.

Experts argue that by the middle of the century, the energy market will become more and more electrified, displacing most of the "dirty" hydrocarbons like oil. According to this scenario, the demand for oil from the current level will decrease by 70% by 2050.

The decline in oil demand will begin in 2023 and will grow rapidly by about 2 million barrels of daily production annually (today the daily production is about 100 million barrels).

The “fatal blow” to the industry will be dealt in 2030 when prices for benchmark Brent crude oil fall to $37- $42 per barrel, which is the limit of profitability for many oil producers.

By 2040, oil prices will range from $28 to $32 per barrel, and by 2050 – from $10 to $18. There are very few fields in the world where oil production will remain profitable at such prices. Most likely, production will remain only in the Middle East, partly in Russia, Kazakhstan, Iran, Mexico and Venezuela. Companies from the United States will be the first to be knocked out of the market – shale production methods will become unprofitable in 2030ish. Norway will be forced to abandon oil production next.

Nearly 200 countries ratified the Paris Climate Agreement in 2015, agreeing to make efforts to limit the rise in average annual temperatures to a maximum of two degrees Celsius over pre-industrial times.

Bloomberg NEF analysts have presented a detailed report on the prospects for "green" hydrogen for the next 30 years. According to the study, modern politicians and energy companies underestimate the potential of clean fuels. BNEF believes that "green" hydrogen will first become cheaper than blue and grey hydrogen, which are produced with CO2 emissions, and by 2050 it will become cheaper than the most affordable form of energy - natural gas.

As reported, the price of wind energy will decrease by 35% in 15 years.

Tags: oil, hydrocarbon production, electricity, oil production, Oil refinery plant, price, petroleum products, ecology, , carbon neutrality

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