The 70th edition of the BP 2021 Statistical Review provides objective and timely data on the drama of 2020 and what the tanker industry might expect
In his introduction to the BP 2021 Statistical Review, the energy company’s chief executive Bernard Looney said the combination of the pandemic and the actions taken to limit its impact led to the largest recession in modern peacetime.
The study reveals global energy demand is estimated to have fallen by 4.5% in 2020. This is the largest recession since the end of World War II, driven by an unprecedented collapse in oil demand, as the imposition of lockdowns around the world decimated transport-related demand.
As the tanker industry continues to explore wind-assisted propulsion, it is interesting to note renewable energy, led by wind and solar energy, increased by a colossal 238 GW last year – 50% larger than any previous expansion.
More importantly for the tanker fleet, oil demand is estimated to have fallen by 6.6M b/d and in its analysis, BP splits the decline into three phases.
Phase 1 covers the onset of the global pandemic from December 2019 to April 2020. This is the period in which global oil consumption literally collapsed, with demand reaching a trough in April of more than 20M b/d below pre-Covid-19 levels.
The almost unreal response of OPEC+ was to turn a spate between Saudi Arabia and Russia into an over-supply situation with traders rushing to secure tankers to store crude oil which had reached a low of US$20 bbl.
Phase 2 is assigned to April to August 2020 and OPEC+’s belated response to cut oil production by 9.7M b/d between May and June 2021. Phase 3, the gradual adjustment to the new reality of waves of lockdowns and releases driving fluctuations in oil demand lasted from August 2020 to the end of that year.
As an energy major, BP sees 2020 as a real-world stress test of global oil demand and acknowledges that for all its faults, the short-term control levers are best in the hands of OPEC+. The jury is still out, as far as BP is concerned, on OPEC+’s ability to manage the long-term slowdown in global oil demand.
“In contrast, the ability – and incentive – for OPEC to offset a sustained and growing fall in oil demand as the world transitions to net zero is less clear. In this case, there may be a greater incentive for individual OPEC members to worry more about protecting and growing their market shares and less about stabilising markets.
For the tanker industry, this is a relatively good outcome. Unstable markets react badly and create the peaks in the tanker shipping cycle. A gradual slow decline in demand for tankers would be a painful process for the industry.
Compared with the previous 70 years of the BP Statistical Review, a considerable amount of space is devoted to global ambitions to getting to net zero. The energy giant notes the EU and 10 other countries have passed net-zero carbon into law and a 34 countries are about to do so. This amounts to 70% of global emissions. Bear in mind that BP’s Statistical Review was written before the devastating floods in Germany, Belgium, the Netherlands and Austria in July 2021, which is likely to lead to demands for shorter lead times for net-zero carbon targets at the UN Climate Change Conference (COP26) in Glasgow in November 2021.
The energy report notes the dramatic increase in societal demand and that inflows into ESG-related funds have increased from less than US$30Bn in 2015 to over US$330Bn in 2020 – an 11-fold increase in just five years.
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