The prospect of peak oil demand is "very real," although nearly 20 years away, says a new report from consultancy Wood Mackenzie.
The firm says that the global oil market is facing a number of fundamental structural changes, with the resulting story not one of a simple peak and decline.
“Demand across the OECD will revert to structural decline by 2020, wiping out about 4 million bbls/d of demand by 2035. Throughout the decade from 2020, a combination of factors, including electric vehicle take-up, as well as government policies and a mature transport sector, will lead to declines in OECD transport oil demand,” the company said.
“In contrast, Wood Mackenzie expects demand in non-OECD economies to grow by nearly 16 million bbls/d by 2035, due in part to rising income levels and a growing middle class boosting demand for transport fuel. On top of this, demand for consumer goods, including plastics, and the need to move freight in an increasingly consumer-driven world, will also contribute to non-OECD oil demand. Non-OECD demand growth slows from 2030, driven by a stall in oil demand growth in China.”
Transport fuel demand, highlights the challenges facing the oil market, Wood Mackenzie noted.
Of the 96 million bbls/d consumed worldwide, almost 60 million bbls/d of that demand comes from the transport sector…Technological advances, both in fuel efficiency and in hybrid and electric vehicles, will erode demand for transport fuels. But that erosion will not be felt uniformly across the world. The rise of electric vehicles and renewable energy explains some of the widening divide between developed and emerging economies.”
The petrochemical sector is one of the few bright spots for oil demand, the company said, with feedstocks expected to add 6 million bbls/d to total demand by 2035 – an increase of 50% from current levels.
“Although oil demand grows to 2035 on aggregate, growth is minimal compared to levels seen over the past 20 years,” Wood Mackenzie said.
“The prospect of peak oil demand is very real. The oil industry is right to be concerned and needs to plan for the changes and challenges ahead.”