The International Energy Agency (IEA) has predicted, for the first time, that global demand for oil will reach its peak within this decade. This forecast is based on the increasing popularity of electric cars and the gradual cooling of China’s economy. The IEA also anticipates a peak in demand for coal and natural gas.
However, the agency clarifies that this peak in demand does not signify a rapid decline in fossil fuel consumption. Instead, it will likely be followed by a period of “an undulating plateau lasting for many years.” As a result, global warming may not be limited to the target of 1.5 degrees Celsius.|
According to the IEA’s Stated Policies Scenario, the world will consume around 102 million barrels of oil per day by the late 2020s. This figure is expected to decline to 97 million barrels per day by mid-century. The transition to clean energy is a global trend that cannot be ignored, says IEA Executive Director Fatih Birol. He adds that the notion of oil and gas as secure choices for the future of energy and climate looks increasingly weak.
While oil demand in industries such as petrochemicals, aviation, and shipping will continue to rise until 2050, this growth will not be sufficient to compensate for the reduced demand from road transport. The rapid increase in electric vehicle sales is a major factor contributing to this decline in demand.
China, which has been a driving force behind global crude consumption, is expected to see a slowdown in its appetite for oil in the coming years. Total consumption in the country is projected to decline in the long run, as stated in the IEA report.
The IEA’s analysis indicates that global oil consumption will follow a similar path to the demand for other hydrocarbons. The agency believes that all fossil fuels will peak before 2030, marking a significant shift in the energy landscape.
The base-case scenario presented by the IEA reflects the current energy policies pursued by governments worldwide and the ongoing effects of the previous year’s energy crisis. In this scenario, global oil demand is projected to peak at 93 million barrels per day in 2030, declining to 55 million barrels per day by 2050.
It is important to note that even under the most ambitious scenario, where global warming is limited to 1.5 degrees Celsius, global oil demand is expected to plunge to 77 million barrels per day in 2030 and just under 25 million barrels per day in 2050.
The report emphasizes that fossil fuel producers will remain influential in the years to come during the process of decarbonizing the global economy. In the base-case scenario, Russia and the Organization of Petroleum Exporting Countries (OPEC) will maintain their combined share of the oil market at 45% to 48% until the end of this decade. By the middle of the century, this share is expected to rise above 50%, largely due to increased production in Saudi Arabia.
On the other hand, Russia is projected to lose approximately a third of its oil production, around 3.5 million barrels per day, by 2050. This decline will be attributed to the challenges of maintaining output from existing fields and developing new ones. The IEA also assumes that Iran and Venezuela will be able to increase their oil output gradually as international sanctions are relaxed.
Despite the continued influence of major oil producers, the report warns that their market power will diminish over time. Consumers now have a growing range of mature clean energy options that are becoming increasingly attractive.