Slowing road transport demand could lead to a spike in oil demand over the next two to five years, McKinsey & Company said in its New World Energy Outlook 2022. report.
Electric vehicle adoption is the main driver of stagnant oil demand growth, according to McKinsey, which sees global liquids demand peaking at around 102 million barrels per day (bpd) over the next two to five years. , despite a short-term recovery in oil demand from the effects of the pandemic. The analysis, however, was conducted before the Russian invasion of Ukraine, McKinsey notes in the report.
“Demand for liquids in road transport is expected to decline by 75% by 2050 after peaking in the early 2020s, due to slower growth in the number of cars on the road, increased efficiency and the “accelerating adoption of electric vehicles (EVs), with bio- and synthetic fuels further reducing demand for crude oil,” McKinsey said in the report.
The chemicals sector will remain one of the few sources of growth in oil demand. Chemical-driven demand is expected to jump 50% by 2050, despite growing downward pressure from demand reduction, recycling and pyrolysis, the report notes.
McKinsey’s analysis – with the caveat that it did not include the war in Ukraine and the fallout of the Russian invasion on the global economy, energy markets and supply chains – presents one of the most pessimistic outlooks on oil demand growth among analysts, industry, and oil investors.
Global oil demand will peak before the end of this decade and decline sharply after 2030, TotalEnergies said in its 2021 Energy Outlook released in fall 2021. Previously, TotalEnergies had forecast oil demand to peak around 2030, with a slow drop after this.
Oil investors polled by Bloomberg Intelligence in November have significantly recalibrated their expectations for peak oil demand over the past two years. Two and a half years ago, a fifth of oil investor clients surveyed by Bloomberg Intelligence said oil demand would peak by February 2021, notes Nathaniel Bullard, BloombergNEF’s chief content officer. In the November 2021 survey, just 2% of oil investors thought peak oil demand would occur by 2025, and less than 40% saw that peak before 2030.
By Tsvetana Paraskova for Oilprice.com
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