The Covid-19 pandemic will leave not only short-term, but also long-term scars on the oil market. Even though the world is currently facing what is arguably the largest oil glut ever recorded, the tables will turn dramatically in coming years. The lack of activity and investments currently planned by cost-conscious E&P firms, combined with an inevitable rebound in global oil demand, is set to cause a supply deficit of around 5 million barrels per day (bpd) in 2025, Rystad Energy calculates, with prices seen topping $68 per barrel to balance the market.
In our base case scenario, global demand for liquids in 2025 will reach around 105 million bpd. Before the Covid-19 pandemic, Rystad Energy expected supply to slightly exceed demand. However, due to the steep curtailment of investments and activity that the current crisis has brought this year, Rystad Energy now estimates that the downcycle in the upstream industry will remove about 6 million bpd from production forecasts for 2025.
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