The global energy industry is going to face fresh challenges in 2016 due to slowing demand around the world, companies have been warned.
Demand growth is expected to slump in the second half of 2016, just as production outside of oil cartel the Organization of the Petroleum Exporting Countries (Opec) begins to slacken, according to a report from management consulting firm Oliver Wyman.
“In 2016 we expect to see demand growth slow to one million barrels per day, most notably in the second half of the year, as the commodity sees some improvement in pricing,” said Francois Austin, head of Oliver Wyman’s energy practice.
Demand for oil rose by 1.3m barrels per day in 2015.
The report cautions that oil trading below $40 a barrel until 2020 would raise the world’s dependence on Middle Eastern oil because few other producers would be able to remain profitable.
The oil price has slumped over the past 20 months by around 70 per cent to just $27 a barrel in January this year. Prices have rebounded somewhat over the past two months, hitting $41.35 per barrel in evening trading yesterday.