HomeMediaLatest NewsThe transition is closed: Saudi Arabia has "canceled" the peak of oil demand

The transition is closed: Saudi Arabia has "canceled" the peak of oil demand

25 March 2024

Salikhov Marcel R. President, Principal Director on Economic Studies, Head of the Economic Department

Marcel Salikhov, President of the Institute for Energy and Finance, commented to the Izvestia newspaper on the forecasts for hydrocarbons demand.

Saudi Arabia, represented by the head of the state oil company Saudi Aramco, Amin Nasser, has announced the insolvency of the energy transition concept at the moment. Nasser believes that the peak of oil consumption will not occur either in 2030 or in some more distant foreseeable future. And states and corporations, instead of "fantasies" about abandoning hydrocarbons, should focus on investments in oil and gas along with investments in alternative energy — otherwise it will be very difficult for consumers and the global economy as a whole.

As Marcel Salikhov noted, Amin Nasser's statements reflect the position of the entire oil industry.

— Indeed, after a certain "hype" regarding the energy transition in 2021-2022, there is now a certain rethinking of the processes. Firstly, this is due to the fact that some "green" technologies (renewable energy sources, electric vehicles, energy storage systems, hydrogen energy) face objective difficulties as their use expands. Secondly, the prices of hydrocarbons are now at relatively low levels. This leads to the fact that hydrocarbons enhance their competitiveness," the expert explained.

Salikhov added that electricity production from renewable energy sources is on average more expensive than hydrocarbons, although this gap has been steadily decreasing in recent years. Therefore, the development of green technologies and an increase in the share of renewable energy sources occurs primarily due to various economic support measures used by certain countries.

— If there are no such measures, then the role of these technologies remains small. Therefore, the creation of additional demand and the development of renewable energy are naturally linked to each other. Relatively speaking, the EU is stimulating investments in renewable energy sources and at the same time providing subsidies for the purchase of electric vehicles and the development of gas station networks," Marcel Salikhov said.

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