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Achieving Full Carbon Neutrality by 2050 Could Critically Depress Oil Prices – IEA

The International Energy Agency (IEA) in its World Energy Outlook 2021 report presented several price scenarios for the global oil market, depending on the intensity of implementation of carbon neutrality measures in the world.

In the event of an active tightening of the global climate policy (the scenario is called Net Zero Emissions), in which the world economy will not need new hydrocarbon deposits, the price of oil could fall to $24 per barrel, and by 2030 it will not exceed $36 per barrel. Taking into account the inflationary factor, the drop in real terms will be much stronger than in nominal terms that would sharply reduce the long-term investment attractiveness of the oil and gas industry.

At the same time, under the scenario (Announced Pledges Scenario), which implies a full implementation on time of only those measures that are already provided by governments, prices in the coming decades will remain quite high: $67 per barrel by 2030 and $64 per barrel by 2050.

The Stated Policies Scenario, a «conservative» forecast, assumes that not all climate targets would be met by 2050. In this case, the IEA forecasts oil prices at $60-90 per barrel. With this development of events, global oil demand will peak at 104 million barrels per day in the 2030s, and then gradually decline by 2050, according to the IEA.

It should be noted that in October 2021 the price of the Brent benchmark surpassed the level of $80 per barrel. In April 2020, amid panic due to the spread of the pandemic, a barrel of Brent reached a local minimum of $15.98.