Exxon Mobil Predicts Sustained High Demand for Oil Through 2050, Diverging from BP’s Projections

152

Exxon Mobil Foresees Continued Strong Oil Demand and Global Supply Challenges Amidst Transition to Unconventional Resources

Exxon Mobil, the largest U.S. oil company, announced on Monday that it anticipates global crude oil demand to remain above 100 million barrels per day (bpd) through 2050, maintaining levels similar to those seen today. This forecast is notably more optimistic than that of its European counterpart, BP, which has projected a more conservative demand outlook. Exxon’s estimate stands at 25% higher than BP’s forecast, highlighting the contrasting views among major oil companies regarding the future of global energy consumption.

This robust demand forecast underpins Exxon’s ambitious production growth plans, which are currently the most aggressive among Western oil majors. The company’s latest global oil outlook, released in 2024, marks a departure from its previous report in 2023, which did not provide a specific demand figure for 2050. By emphasizing the long-term need for oil, Exxon is positioning itself to continue its significant role in the global energy landscape well into the mid-21st century.

In contrast to BP, Exxon Mobil presented a more cautious view regarding global efforts to reduce carbon emissions. While BP anticipates that technological advancements will begin to significantly reduce emissions by the middle of this decade, Exxon projects that meaningful reductions will not occur until after 2029. This divergence in outlooks reflects differing strategies among oil majors as they navigate the complex transition toward more sustainable energy sources.

Exxon’s production targets for the current year underscore its commitment to maintaining a dominant position in the oil and gas industry. The company plans to produce 4.3 million barrels of oil and gas per day in 2024, which is 30% more than Chevron, its top U.S. rival. In stark contrast, BP is actively reducing its production, aiming to lower its output to approximately 2 million barrels per day by 2030 as part of its broader strategy to pivot toward renewable energy sources.

Chris Birdsall, Exxon’s Director of Economics, Energy, and Strategic Planning, reinforced the company’s optimistic outlook for oil demand. “Oil and gas demand have a very, very long runway and will continue to grow over the next few years,” Birdsall stated in an interview with Reuters. Exxon’s analysis suggests that the global population, expected to rise from 8 billion today to nearly 10 billion by 2050, will drive ongoing demand for energy, offsetting the impact of increased electric vehicle (EV) adoption.

Exxon Mobil estimates that even if every new car sold globally by 2035 were electric, crude oil demand would still hover around 85 million bpd—similar to the demand level in 2010. This projection is significantly higher than BP’s, which forecasts that oil consumption will peak in 2025 and gradually decline to 75 million bpd by 2050. Exxon’s estimates also far exceed the International Energy Agency’s (IEA) target, which suggests that crude demand would need to drop to 24 million bpd by 2050 to achieve net-zero emissions globally.

Looking ahead to 2050, Exxon anticipates that 67% of the global energy mix will still be supplied by oil, natural gas, and coal, a slight decrease from the 68% recorded in the previous year. This projection underscores the company’s belief in the continued relevance of fossil fuels in the global energy market, even as the world grapples with the need for cleaner energy alternatives.

Exxon also highlighted the necessity of increased investment in oil production, particularly as the world transitions to unconventional resources such as U.S. shale. The company noted that wells in these geological formations have a shorter production lifespan and exhibit a more pronounced natural decline compared to traditional oil sources. Without new investments, Exxon projects that global oil output could decrease by about 15% per year—a rate significantly steeper than the 8% annual decline estimated by the IEA in 2018.

The potential consequences of underinvestment in oil production are stark. According to Birdsall, the rapid decline in output could cause oil prices to quintuple, with global supply potentially plummeting to as low as 30 million bpd by 2030. “Global oil and natural gas supplies would virtually disappear without continued investments,” Birdsall warned. He emphasized that the shift to more short-cycle unconventional assets, which require ongoing investment to maintain production levels, is a key factor driving this scenario.

Exxon’s outlook presents a clear message: despite the global push toward cleaner energy, oil and gas will continue to play a crucial role in meeting the world’s energy needs for decades to come. However, the company also acknowledges the challenges posed by the transition to unconventional resources, underscoring the need for sustained investment to prevent a sharp decline in global energy supplies.

As the energy industry navigates this complex transition, Exxon’s projections highlight the ongoing tensions between meeting immediate energy demands and addressing long-term environmental goals. The company’s stance contrasts sharply with that of BP and other European oil majors, setting the stage for continued debate over the future of global energy policy and the role of fossil fuels in a changing world.