Topline
Global demand for oil is set to hit a peak by the end of this decade, the International Energy Agency said Wednesday, as volatile energy prices accelerate a shift to clean alternatives following the Covid-19 pandemic and Russia’s invasion of Ukraine.
Global demand for oil will peak by the end of this decade according to a report by the IEA.
Key Facts
The IEA forecasts global oil demand will rise to 105.7 million barrels per day in 2028, an increase of around 6% compared with 2022.
The agency said global demand for oil used in transportation will begin declining in 2026, thanks to a shift to electric vehicles and policy measures pushing for more efficiency.
Demand growth for gasoline is set to reverse at the end of this year, while the rise in demand for “combustible fossil fuels” will peak in 2028, the report adds.
Meanwhile, demand growth for oil will slump to just 400,000 barrels per day in 2028—compared with 2.4 million barrels per day in 2023.
Despite the slump in demand, the IEA notes that “additional policy measures and behavioral changes” are necessary to ensure its goal of net zero emissions by 2050.
Crucial Quote
IEA Executive Director Fatih Birol said: “The shift to a clean energy economy is picking up pace, with a peak in global oil demand in sight before the end of this decade…Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition.”
Surprising Fact
As air travel rebounds following the removal of pandemic-related travel restrictions, aviation fuel will be the biggest driver of demand during the five-year period assessed by the report. At the start of 2023, Demand for jet fuel remained 13% below 2019 levels and is expected to surpass pre-pandemic levels by 2027.
Key Background
Global oil prices have seen extreme volatility over the past three years. Amid the pandemic in 2020, the global benchmark Brent Crude index briefly fell below $10 a barrel while the U.S. benchmark dropped below $0 per barrel as the pandemic triggered a lockdown worldwide. Following Russia’s invasion of Ukraine last year, global oil prices briefly surged past $130 per barrel, leading to decades-high inflation numbers in the U.S. and Europe.
Further Reading
