Brazil and the United States will drive global oil supply growth over the next decade before giving way to a resumption of OPEC production in the mid-2030s, according to BP's latest energy outlook report published on Monday. The Brazilian pre-salt layer is one of the main factors responsible for this milestone.

In a “fast” scenario that foresees new policy measures that inflate carbon prices, the Brazilian fuel production liquids would double to 6Mb/d by 2030 before falling to 3Mb/d by 2050, the report said. 

The US, meanwhile, is expected to increase production from 18MB/d in 2018 to 21MB/d in 2030, before volumes fall to 11MB in 2050 under the same scenario.

OPEC's share of global output would drop to 29% in 2030 from 38% today, and then increase to 43% in 2050. 

"The composition of global liquids supply is initially dominated by a recovery in Tight Oil in the US, with OPEC's share of production rebounding in the second half of the outlook," the report said. 

“In the Fast [scenario], US Tight Oil bounces back from declines caused by the impact of Covid-19, rising to around 15Mb/d in early 2030. Brazilian production also grows over the same period,” BP said. As US constrained formations mature and OPEC adopts a more competitive strategy against a backdrop of accelerating declines in demand, US production and non-OPEC production more generally declines from the early 2030s onwards.

BUSINESS, AS ALWAYS

Under BP's “business as usual” scenario, Brazilian production would increase to 5Mb/d by 2030 and remain stable for the next 20 years. US production would increase to 21 Mb/d by 2030 and fall to 15 Mb/d by 2050.

On the other hand, OPEC would see its share of overall production drop to 32% before rising to 42% by mid-century. 

“Non-OPEC supplies follow a similar business-as-usual pattern, expanding in the first half of the outlook, led by increases in US-restricted oil and Brazil, before falling in the second half, with US-restricted oil peaking in the early 2030s,” BP said. “This reduction provides space for OPEC to increase its production from the mid-2030s onwards, with its 2050 production level close to 2018 levels and its market share rising to over 40%.”

RENEWABLE

Meanwhile, renewable energy will be driven by rising carbon prices, BP said. In a fast-paced scenario, CO2 emission costs could reach US$250/t by 2050 in developed countries and US$175/t in Latin America and other emerging economies.

“This increase in carbon prices encourages significant gains in both energy efficiency and the use of low carbon energy sources“Said the report. 

It added that a business as usual outcome would result in carbon prices of $65/t and $35/t in developed and emerging economies respectively.