BP CEO: Second Wave Of COVID Hits Oil Demand Harder Than Expected

By Tsvetana Paraskova

The second wave of coronavirus cases in the world is impacting global oil demand “maybe a little bit more than we thought” in the second half of this year, BP’s chief executive Bernard Looney said on the virtual 2020 India Energy Forum by CERAWeek on Monday.

In terms of oil demand, undoubtedly there has been an impact this year, “probably less than we thought in the first half of the year, and maybe a little bit more than we thought in the second half of the year as the second wave of infections come in around the world,” Looney said.

It is probably too early to assess the true impact, especially for the medium to long term, he noted, but added that there would be some impact. Oil has been hit harder than other fuels, BP’s top executive said.

Speaking about peak oil demand, Looney said that “peaking of oil demand does not mean the end of oil. Oil will be around for a very, very long time.”

In its annual outlook last month, BP said that globally, we may have passed peak oil demand last year, as fuel consumption may never recover from the pandemic-inflicted decline.

In all of BP’s scenarios, global oil demand is set to decline within 2050. The Rapid and Net Zero scenarios assume that oil demand has already peaked, while in the Business-As-Usual (BAU) scenario, demand is expected to peak in the early 2020s due to growing electrification and efficiency in road transportation. The rise of EVs will see oil demand for transport peaking in the mid- to late-2020s, according to BP.

In the short term, Looney’s assessment of oil demand in the second half of 2020 impacted “maybe a little bit more than we thought” coincides with the latest demand estimates and forecasts from OPEC and the International Energy Agency (IEA). Both the cartel and the international agency cited in their latest monthly reports the uncertainty about the pace of economic and oil demand recovery in a second COVID-19 wave, with the IEA warning that “those wishing to bring about a tighter oil market are looking at a moving target.”

By Tsvetana Paraskova for Oilprice.com