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Brent Crude oil prices could fall to US$10 per barrel by 2050 if the world accelerates the energy transition with decisive action to achieve the Paris Agreement climate goals, according to energy consultancy Wood Mackenzie (WoodMac).
Action to achieve Paris climate goals will upend oil and gas markets
Apr 16, 2021 10:30:am
Summary
by: Wood Mackenzie
Action to achieve Paris climate goals will upend oil and gas markets
If the world acts decisively to limit global warming to 2°C by 2050, the scale of change will revolutionise the energy industry. Progressive electrification will squeeze the most polluting hydrocarbons out of the energy mix, nearly eliminating their markets. Oil demand will shrink, and with it, so will the power of major oil producers. Gas demand will remain resilient, but business models will need to evolve.
Ann-Louise Hittle, vice president, Macro Oils, at global natural resources consultancy Wood Mackenzie, said: “Our Accelerated Energy Transition Scenario – AET-2 – gives an indication of how energy demand, supply and pricing will change if policy and technology are rapidly deployed to cut greenhouse gas emissions in line with the Paris Agreement.
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Wood Mackenzie has highlighted that under its Accelerated Energy Transition Scenario (AET-2), oil demand will drop significantly, and with it, oil prices.
Wood Mackenzie has highlighted that under its Accelerated Energy Transition Scenario (AET-2), oil demand will drop significantly, and with it, oil prices.
Within the company’s AET-2 scenario, oil demand begins to drop in 2023. Soon after, the company says the decline accelerates to year on year falls of two million barrels per day, reducing demand to about 35 million barrels per day by 2050. Consequently, by 2030 Wood Mackenzie said it would expect Brent crude prices to average $40 per barrel, down from the $60 to $70 per barrel range the industry is experiencing currently. By 2050, Brent may slide to between $10 and $18 per barrel, Wood Mackenzie outlined.