Global oil demand set to plateau, not decline by 2040: IEA

  • Tuesday, October 13, 2020
  • Source:ferro-alloys.com

  • Keywords:Oil demand
[Fellow]Global oil demand set to plateau, not decline by 2040: IEA

[ferro-alloys.com]Global oil demand is still set to flatline rather than peak in the coming two decades, the International Energy Agency said Oct. 13, despite growing expectations that the pandemic could trigger a rapid shift away from oil to cleaner energy.

After recovering from the "exceptional ferocity" of the COVID-19 crisis, world oil demand will rise from 97.9 million b/d in 2019 to 104.1 million b/d in 2040, according to the IEA's base-case scenario in its latest annual World Energy Outlook.

Compared to last year's report, however, oil demand is likely to be some 2 million b/d lower in 2030, when it stabilizes at just over 103 million b/d on a lower trajectory but continues to edge up for the next decade, according to the IEA.

Clean transport policies and surging renewable energy will continue to eat into oil demand growth, the IEA believes, but petrochemicals and long-distance transport are seen accounting for all net demand growth by 2040.

"The era of global oil demand growth will come to an end in the next decade," IEA head Fatih Birol said. "But without a large shift in government policies, there is no sign of a rapid decline."

After diving by about 8 million b/d on average this year, the IEA said it still believes that a global economic rebound will soon push oil demand back to pre-crisis levels of close to 100 million b/d.

Global oil demand is expected to grow by 5 million b/d in 2021 and return to pre-crisis levels by around 2023, under the base-case scenario.

Behavior boost

The report comes less than a month after BP forecast that global oil demand may have already peaked, as the pandemic kicks the world economy onto a weaker growth path and accelerates the shift to cleaner fuels.

BP delivered a more pessimistic outlook for oil, forecasting oil demand around 3 million b/d lower in 2025 compared to 2019 levels and almost halving to less than 55 million b/d by 2050, due to "scarring effects" from the crisis that will hit absolute demand for fossil fuels.

S&P Global Platts Analytics sees global oil demand peaking in 2040 at around 115 million b/d before slipping to 112 million b/d in 2050 under a "most likely" scenario, some 3 million b/d lower than pre-crisis forecasts.

Some market watchers are growing increasingly bearish on the future of oil, citing lasting behavior changes from the crisis such as large-scale remote working, less international travel, and a massive policy boost for spending on low-carbon, clean energy sources.

But any impact on oil demand from changing behavior patterns due to the pandemic may be short-lived and actually supportive of demand, the IEA said.

While efficiency improvements and more remote working will limit demand growth, the IEA cautioned that some expected changes in behavior such as shifting from public to private transport and delaying the replacement of old cars will actually push up oil demand.

"Not all the shifts in consumer behavior disadvantage oil. It benefits from a near-term aversion to public transport, the continued popularity of SUVs and the delayed replacement of older, inefficient vehicles," the IEA said.

As a result, the IEA sees a net demand increase of around 50,000 b/d from pandemic-related behavior changes in 2030.

Despite the aviation sector taking longer to recover to pre-crisis levels, the IEA said it sees the dramatic changes in consumer behavior in 2020 having "limited overall effect" on oil demand in the long run.

Oil demand in aviation will increase by 1.2 million b/d between 2019 and 2030, under the base-case scenario, accounting for a quarter of total oil demand growth, it said.

Car sales slowdown

Nevertheless, the IEA said it sees signs that the clean energy transition is "gaining momentum" with "massive sums of money" committing to economic recovery on a cleaner, more resilient basis.

Oil demand in advanced economies such as Western Europe will fall by nearly 5 million b/d by 2030 due to a strong policy push for electrification and efficiencies.

Under a more optimistic scenario for clean energy, the IEA estimates that oil demand could peak by the early 2020s and fall by a third to 66 million b/d in 2040, with road transport responsible for over 60% of the reduction.

Longer-term global oil demand will continue to be eroded by improved vehicle efficiency, greater use of biofuels, and rapid electrification of private cars, urban buses, and two/three-wheelers, the IEA said.

Oil demand in India remains the largest source of growth this coming decade while China peaks around 2030 at just over 15 million b/d. In terms of sectors, demand from petrochemical and heavy transport is still expected to take the lead from passenger transport.

In the passenger car market, electric vehicle sales are expected to continue growing strongly on robust policy support, the IEA said. But with the potential for lower long-term oil prices extending the payback time for EVs, the IEA left its estimate for the number of electric cars on the roads in 2040 little changed at 330 million vehicles.

It said the impact of the pandemic means vehicle turnover overall will slow and the total number of cars in 2030 is now expected to be 7% smaller than year-ago estimates.

"This reinforces oil demand for cars plateauing in this decade at roughly 2019 levels of demand, before declining after 2030," the IEA said.

(S&P Global Platts)

  • [Editor:王可]

Tell Us What You Think

please login!   login   register
  • Buy & Sell

 
Please be logged in to comment!