Oil and Gas

UPDATE 1-Equinor sees oil demand peaking 2-3 yrs sooner due to virus

* GRAPHIC-Oil demand forecast: (Adds detail, quotes)

OSLO, Nov 17 (Reuters) - Oil firm Equinor said on Tuesday it expects global oil demand to peak by around 2027-2028, two to three years earlier than the company previously forecast as a result of the COVID-19 pandemic.

There is no consensus on when oil demand could peak, but expectations weigh on oil companies’ plans to explore for and develop new resources.

“Earlier assumptions for peak oil demand to happen around 2030 may be challenged,” the Norwegian oil major said in its annual energy outlook.

While COVID-19 related travel restrictions and economic downturn slashed demand for oil this year and some of its effects could last longer, such as frequency of air travel, the future demand growth could be also restricted by supply shortage, it added.

“A decline in oil supply due to low investments could force that date (peak oil demand) 2-3 years earlier,” it added.

“It will be both the peak of supply and demand,” Equinor’s Chief Economist Eirik Waerness told Reuters.

Equinor now sees oil demand at 99.5 million barrels per day (bpd) in 2030, and falling to 84 million bpd in 2050, under its central scenario, dubbed Reform.

A year ago, it saw demand at 105 million barrels per day (bpd) in 2030, due to the increased use of electric cars, and declining to 93 million bpd by 2050, under the same scenario.

The International Energy Agency (IEA) said global oil demand was unlikely to get a significant boost from the roll-out of vaccines against COVID-19 until well into 2021.

Waerness said oil demand was likely recover to pre-pandemic levels by around 2023.

While oil companies cut capital spending by around 30% this year due to the fall in demand, the oil market was expected to be well supplied for the next few year, Equinor said in its outlook.

Reporting by Nerijus Adomaitis; editing by David Evans and Marguerita Choy