Renewable energy shift to cause oil demand peak pre-2030.

Global Oil Demand Set to Peak Before the End of the Decade

According to a new report from the International Energy Agency (IEA), global oil demand is expected to reach its peak before the end of the decade. This significant milestone is attributed to investments in clean energy sources, particularly electric vehicles, and a decrease in oil demand growth from China.

Medium-Term Oil Market Forecast

In its latest 2023 medium-term oil market forecast, the IEA predicts that global oil growth will continue to rise by 6% between 2022 and 2028. This growth will be driven by strong demand from the petrochemical and aviation sectors, ultimately reaching around 105.7 million barrels per day.

However, after reaching this peak, the report states that oil demand will slow down significantly. It is projected to decrease from 2.4 million barrels per day this year to just 0.4 million barrels per day in 2028.

The expansion of electric vehicles, biofuel advancements, and improvements in fuel economy have played crucial roles in reducing oil demand, as highlighted in the report. The IEA also estimates that gasoline demand growth will reverse starting in 2023, followed by a decline in demand for all transport fuels after 2026.

The Shift to a Clean Energy Economy

“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 as electric vehicles, energy efficiency, and other technologies advance,” stated Fatih Birol, the director of the IEA.

Birol emphasized the need for oil producers to carefully monitor and adjust their investment decisions to ensure a smooth transition in the face of this accelerating change.

Furthermore, the report highlights that China’s demand growth is expected to slow down significantly by 2024. After experiencing a surge in oil demand following the lifting of COVID-19 restrictions, China’s consumption is projected to peak in mid-2023 and gradually decline to an average of just 290,000 barrels per day from 2024 to 2028.

The IEA report also mentions that concerns over the supply disruptions caused by Russia’s conflict in Ukraine have expedited the transition to renewable energy sources, bringing the peak demand for oil closer within reach.

In a separate report, the IEA revealed that global clean energy investment is on track to reach $1.7 trillion in 2023 alone. This surge in investment reflects the growing embrace of renewable and clean energy sources, including electric vehicles, nuclear power, grids, storage, and low-carbon technology.

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