One of the reasons why people invest in oil firms is due to the projected increase in oil demand. The IEA
raised global oil demand outlook. The agency said that stronger consumption of oil had led its demand
to rise over the last year by 110,000 bpd. The firm expects world oil demand growth of 1.3 million bpd.
There has been a positive response in the production of oil in the US and other countries outside the
OPEC as governments invest in oil firms.
The Saudi Aramco boss said that demand for oil is increasing.
Saudi Aramco is a state owned oil firm located in Saudi Arabia. The CEO in a press conference said that
he had predicted a total oil demand to expand by 1.2 million barrels a day in a 2016 group report.
He said that they are seeing an increase in oil demand in the US and India.
How will companies respond to increased oil demand?
After Plummeting abruptly from their peak in 2014, Oil prices have regained some of their losses in the
past few months. Mr. Amin Nasser, the CEO of Saudi Aramco also said that he plans to expand every
aspect of the company and also described the current market as an excellent opportunity for significant
growth. He also added that he would consider shared ventures all over the world including India, US,
Vietnam, China, and Indonesia.
What about electric cars?
Somehow, someone who has been following advancement in technology very closely may think that
electric cars will reduce demand for oil. Global demand for oil will still be growing, come 2040 even with
the increased use of electric cars. Although there might be an increase in the use of renewable energy,
the oil demand will still rise as there is a rising prosperity in the developing world. BP group’s chief
economist Spencer Dale said that it is not Teslas and the US, it is the fact that more than 2 billion people
in continents like Asia are moving to middle incomes and can afford their first car that drives the oil
Massive machines still demand oil
Heavy trucks and freight play should also not be overlooked in driving oil demand. The International
Energy Agency in their published report said that the world needs to get a handle on the fuel efficiency
for freight to curb the demand for oil.
Freight transit plays a significant role in the economic growth. IEA said that only China, Canada, the US,
and Japan have fuel efficiency standards for heavy trucks. This is just a tenth of the countries that have
rules for passenger vehicles.
So far, since 2000, heavy trucks have accounted for 40% of the total growth in the oil demand.
Trucks alone burn around 17 million barrels of oil per day. This is about a fifth of the global oil demand.
This means that demand is still growing. This is just some of the signs that demand for oil is increasing
more than fear.