John Browne, the former chief executive of BP, has witnessed first hand the ups and downs of the oil industry for more than five decades. But unlike the usual market cycles of boom and bust he believes the coronavirus-linked price crash will serve as a warning for the industry of what is to come. The pandemic has wiped out almost a third of global oil demand through lockdowns and travel bans, landing a direct hit on a sector already in the grip of its own crisis: how to evolve when climate change has risen up the political agenda, and oil demand is threatening to peak? The timing of oil’s crash is being viewed by some as a trailer for a summer blockbuster — a faster, flashier version of the main movie, if oil demand really does top out in the next 10 to 15 years. In the past month oilfields have been shut down, storage tanks have filled up in record time and national oil companies even briefly embarked on a price war to try and win a bigger slice of a shrinking market. US prices turned temporarily negative for the first time in history in April, so depressed was demand. Investors had already turned their back on the sector even before the pandemic struck. They were motivated by fears that demand growth is weakening and the rise of ethical, social and governance-led investing has damped appetites for shares in big polluters. In the US, the value of energy companies on the S&P 500 has shrunk to less than 5 per cent of the total index from 11 per cent a decade ago. The International Energy Agency had been predicting that global oil demand — which has risen by an average of 1.5m barrels a day each year in the past decade to reach 100m b/d in 2019 — would start to witness slower growth from 2025. Most oil companies believe wider adoption of electric vehicles or stricter regulation on emissions could see demand peak between 2030 and 2035.
FT 3rd May 2020 read more »