Exxon says global oil use will remain robust and warns of supply shock

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ExxonMobil said global oil demand would remain virtually flat until 2050 and warned that any move to cut investment in fossil fuels would trigger a further energy price shock.

In a forecast published on Monday, the US supermajor said oil demand would remain above 100 million barrels per day for the next 25 years – a forecast that assumes an energy transition will fail to quench the world’s thirst for fossil fuels.

Exxon has warned of a new global oil shock if companies do not continue to invest to meet demand, saying crude prices could quadruple as supply dwindles.

Exxon’s prediction contrasts sharply with British oil major BP, which expects oil consumption to fall to 75 million barrels per day in 2050. The International Energy Agency estimates oil demand will fall to 54.8 million barrels per day whether governments met their climate commitments on time.

The Texas oil company’s forecast comes amid a widening debate between fossil fuel producers trying to defend their market and policymakers and climate scientists warning of dangerous global warming if consumers don’t quickly cut back on the fuels they burn fossils.

Exxon has long argued that the world will need more oil to lift billions of people in developing countries out of poverty. But it faces lawsuits from environmentalists and California policymakers who say Exxon misled the public for decades about how burning fossil fuels warmed the planet.

The forecast comes three years after Exxon lost one of Wall Street’s most memorable proxy shareholder battles against activist investor Engine No. 1, which argued the supermajor faced an “existential business risk” by pinning its future on fossil fuels. This year, Exxon sued activist investors who filed shareholder proposals asking it to do more to fight climate change.

Despite strong demand for oil and gas, Exxon has estimated that carbon emissions will fall by 25% by 2050 due to greater energy efficiency, the rollout of technologies such as carbon capture and renewables.

However, this is significantly below the emissions reductions needed to meet the net zero targets outlined in the 2015 Paris Agreement on climate change.

In June, the Paris-based IEA, which represents consumers in the rich world, warned that the world faces a “staggering” oil glut by the end of the decade if producers continue to increase output as the world moves away from fossil fuels .

Producers’ cartel OPEC described the IEA’s forecast as “dangerous commentary” and stuck to its own forecast for oil demand to reach 116 million barrels of oil by 2045.

Exxon’s report said oil and gas will remain central to the global economy as population growth drives a 15 percent increase in total energy consumption by 2050.

While the need for oil to make gasoline for cars will drop by a quarter by 2050, Exxon predicted, demand from industry — the largest source of consumption — will compensate.

Exxon uses the forecasts contained in its global outlook to help determine its future production growth plans, which are among the most optimistic in the oil industry and include expanding projects from the Texas shale to the island of Guyana.

Environmental activists said Exxon’s forecast was a last-minute effort by an industry struggling to woo investors to support new production.

“There is no long-term future and only material risk in the oil boom as governments around the world and financial institutions embark on an energy transition,” said Hannah Saggau, senior climate finance campaigner at Stand.earth , an environmental organization.