For virtually all of his career, legendary oil trader Andy Hall was a permabull when it comes to the price of oil.
While that served him well for much of the past three decades as oil prices rose alongside China’s ascent and relentless demand for crude, resulting in a personal fortune and making Hall one of the richest and most successful commodity traders in the world, it also was the reason for his demise, when after several years of declining oil prices following the OPEC near collapse on Thanksgiving Day 2014, Hall – who was unwilling to change his bullish outlook – was forced to shutter his Astenbeck hedge fund for good in 2017, “a capitulation of one of the best-known figures in the commodities world” according to Bloomberg.
Since then Hall has kept a low profile, but he finally emerged last week in New York… as an oil bear, and instead of seeing relentless oil price growth coupled with the occasional fling in “peak oil”, now predicts the biggest shift yet in the global market: the end of demand growth.
“There’s a non-zero chance that by 2030, we will see a plateauing or decline in global oil consumption,” the former hedge fund manager told at an industry event in New York which was organized by Orbital Insight and RBC Capital Markets, and quoted by Bloomberg. “It’ll happen because of technology, electric cars, renewable energy.”
“Oil demand has grown exponentially since the end of World War II,” Hall said at the event,. “It was just a given that oil consumption would grow from here to eternity. Except we knew logically that couldn’t happen.”
The long-term implications for the price of oil are obvious.
Hall’s revised view is hardly original, echoing a recent warning from the International Energy Agency according to which global oil consumption will plateau in about a decade. The prospect of “peak demand” would end an expansion that dominated the past century and comes as investors and governments face pressure to move away from fossil-fuel-based economies.
The notable shift from “peak oil” to “peak demand” comes even as new oil supplies from places like Brazil, Norway and Guyana soar, while US shale production has helped US oil production hit an all time high and make the country energy independent.
It comes amid growing concerns from the oil and gas industry that it’s running up against a shift in energy consumption. That transition will increasingly limit its ability to make ends meet, with some shale firms and oil-service providers already struggling or going under, according to both Bloomberg and a recent lengthy report from Bloomberg.
Speaking later in an interview with Bloomberg, Hall said that solar and wind energy are already cheaper than coal.
“If the world fully transitions to renewable energy, what is the role of a fossil fuel company?” he said. “I think renewables is the new oil.”
Hall also quoted Sheikh Ahmad Zaki Yamani, the former Saudi Arabian oil minister who famously said that the Stone Age didn’t come to an end for lack of stones, and the Oil Age will end long before the world runs out of oil.
Global benchmark Brent crude traded at around $62 a barrel. While prices are up about 16% this year, they are still well below lofty highs above $100 from earlier this decade.
“Could we see $100 oil again? Absolutely,” Hall told Bloomberg News. “That would only be temporary and hasten the ultimate demise.”