The Saudi Aramco IPO is shining a spotlight on peak oil demand
The release of the Saudi Aramco IPO prospectus is putting a fresh spotlight on a big question: the date when global oil demand will peak.
Driving the news: The document released over the weekend includes estimates that demand will grow until around 2035 before leveling off, but that the inflection point could occur by the late 2020s.
- This week, the International Energy Agency will unveil its closely watched annual World Energy Outlook.
- IEA's three main scenarios project future demand through 2040 based on existing policies, on announced plans, and on a world with policies aligned with the Paris agreement goals.
Why it matters: The timing of peak demand has big repercussions for the planet, and the strategy and future of oil producers.
The big picture: The prospectus makes the case that Aramco is very nicely positioned to increase market share in a world where global thirst for oil is flat or declining.
- They argue that their comparatively low per-barrel production costs and emissions give them an edge.
- The 658-page document sees Saudi crude, condensate and natural gas liquid supplies growing through at least 2050.
But, but, but: Bloomberg's Liam Denning connects the dots between the upcoming Aramco IPO and the flop of Brazil's big offshore auction late last week, which he notes is a sign of "expectations on the part of many investors that oil has entered its twilight years."
- Plus, while the prospectus is largely meant to promote the company ahead of the offering, the various disclosures on climate-related risk state, "Climate change concerns and impacts could reduce global demand for hydrocarbons and hydrocarbon-based products and could cause the Company to incur costs or invest additional capital."