Oil Industry Forecasts: A Comparative Analysis of the Last Three Years
Posted: July 16, 2024
While quarterly, annual, and long-term oil industry forecasts aim to inform the sector’s business strategies and policies, the landscape remains volatile. Unexpected occurrences such as pandemics, wars, economic changes, and weather can significantly influence how predictions unfold. This changes the course of availability, pricing, and investments.
Still, oil industry forecasts are key to steering extensive planning and production activities. Specifically, they promote dialogue, share knowledge, and ensure data transparency. In this guide, we compare oil industry projections from the past three years with the 2024 outlook. We also consider significant shifts that led us to where we are today.
Oil and Gas Industry Forecast: Looking Back at 2022–2023
The World Oil Outlook (WOO) for 2022 contained a continually contradicting focus on both rising oil demand and the rapid expansion of solar, wind, and geothermal energy sources. Reports predicted an increase in all major fuel types except for coal. What’s more, oil would maintain its dominance in the energy mix with a 29% share by 2045.
In 2022, China still faced severe COVID-19 restrictions. As other nations entered post- COVID recovery, aviation, road transportation, and petrochemical sectors again boosted consumption. India and other non-OECD countries drove oil demand.
Asia-Pacific was predicted to remain the largest crude oil importing region with a continued dominance of trade links between the Middle East and Asia-Pacific regions. Despite this, investment levels fell short, impacted by downturns, the pandemic, and environmental, social, and governance (ESG) concerns.
Photographer: FXQuadro
Other oil industry forecasts included significant refining capacity additions in Asia-Pacific, Middle East, and Africa, as well as expected tightening of the downstream market. Technological advancements and stringent public policies would increasingly influence the energy landscape with enhanced global cooperation to achieve sustainable development goals.
2023 Industry Outlook
Oil industry forecasts for 2023 predicted stagnating gas consumption as markets increasingly shifted toward renewable energy sources. Demand growth in Asian markets, Africa, and the Middle East was set to largely influence future market prices.
With China lifting COVID-19 bans at the end of 2022, there was a noteworthy rebound in oil demand. This contrasted with declined production in OECD Asia-Pacific countries. China’s oil demand surged to a record high in September 2023, driven by its petrochemical industry. Nonetheless, oil prices dropped significantly in the last months of 2023 after a mid-year high.
In response to the high oil prices of 2022, oil and gas companies became more disciplined with capital spending. They focused instead on returning cash to shareholders.
The gas market continued to be volatile, particularly with supply challenges due to the ongoing impact of Russia’s invasion of Ukraine. Still, the oil and gas industry reported a successful 2023. The United States became the leading global producer with a 21% market share, surpassing Saudi Arabia’s 13%, and Russia’s 10%.
2023 Oil Industry Trends
The adoption of artificial intelligence (AI) in the oil and gas industry showed meaningful growth in 2023. AI’s primary applications include data analysis, physical labor automation (especially in offshore projects), predictive maintenance, and operational efficiency. Notable companies implementing AI technologies include BP, Chevron, Ecopetrol, Petrobras, Reliance Industries, Repsol, Rosneft, Saudi Aramco, and Shell.
What’s more, the industry witnessed 1,571 M&A deals in 2023. The largest deals involved ExxonMobil’s acquisition of Pioneer Natural Resources which closed in May 2024 and Chevron’s acquisition of Hess which has been delayed due to a dispute with Exxon Mobil.
In line with industry forecasts, ESG goals also became increasingly important for oil and gas companies. Oilfield services (OFS) looked to diversify their business models to reduce their reliance on the oil and gas industry. Companies began expanding into new markets, such as renewable energy and carbon capture, utilization, and storage (CCUS).
This increased the demand for environmentally focused job roles, especially from January to November 2023, with a peak in June. Natural gas became a way to bridge the gap between fossil fuels and renewable energy sources.
Oil Industry Forecast for 2024: What Changed?
Since 2022 and 2023, a number of disruptions have affected the energy market. Let’s look at what’s behind the shifting oil industry forecasts.
Photographer: R. Classen
Global Events
Market instability emerged in early 2024 due to Middle Eastern conflicts, raising alarms over key oil trade routes. Although oil and LNG output remained steady, many shipowners looked to divert routes due to safety concerns.
Continued conflict could lead to market volatility and sway investment choices. Meanwhile, Ongoing sanctions against Russia have disrupted global oil trade as nations search for other suppliers.
Pressure To Fast-Track Clean Energy Economies
Although the shift toward clean energy economies received a lot of attention in previous years, there’s increasing pressure to fast-track change. Rigorous climate policies and goals for net-zero emissions are steering investments into renewable energy and technologies that reduce oil dependence.
What’s more, The rise of electric vehicles (EVs) and better fuel efficiency could reduce oil demand for transportation, especially after 2026. Global government incentives for electric transport are also likely to curb the increase in oil demand within this sector.
At the same time, strong demand from the petrochemical industry offsets the declining oil use in transportation fuels. This will sustain growth in overall oil consumption, particularly in emerging economies. As emerging and developing economies industrialize and urbanize, they’ll be key in fueling the growth in energy requirements. But the rate at which they embrace cleaner technologies will shape the trajectory of this demand.
Employment Shifts
While energy sector jobs increased in 2023, there was a significant loss of jobs in the oil and gas space. Forecasts show concerns that oil and gas workers may not return as hiring picks up in the cyclical industry in 2024. Retaining skilled workers and attracting new talent also remains a challenge.
Technology Adoption
In 2024, the energy market unfolded with a renewed focus on digital transformation and technology innovation. The global energy industry is experiencing an unprecedented transition. This change is bringing exciting new growth opportunities to the oil and gas sector.
Digital advancements and innovative business models will optimize oil and gas operations in numerous ways. They’ll improve process efficiency, bolster safety, enable predictive maintenance, reduce costs, and drive profitability.
Navigate Changes in Oil Industry Forecasts with Strategic Partnerships
Due to political shifts, technological innovation, and the urgent need for energy diversification, the oil industry is entering a period of far-reaching change. In the midst of this transition, the industry faces both labor challenges and the complications of meeting increased energy requirements while shifting toward more sustainable practices.
By offering cutting-edge flow control solutions and maintaining a flexible supply chain, Gilmore helps organizations navigate the fluctuating oil market with confidence and agility. Embrace the opportunity to optimize your operations and drive industry forward innovations. Connect with Gilmore’s expertise and extensive global network today.
