New analysis from Bloomberg points to the global demand for oil peaking in 2027, as increasing volumes of electric vehicles (EVs) reduce the need for crude oil.
The demand for oil hit a historic high of 103 million barrels a day (bpd) in June according to the International Energy Administration (IEA), with this being driven by a resurgence in air travel, strong demand from China and economic activity in OECD countries. Demand over the year as a whole is expected to average 102.2 million bpd, which is another new record.
Nevertheless, Bloomberg believes this growth will gradually start to peter out in around four years, as the uptake of electric vehicles continues to rise. Moreover, it believes the demand for petrol and diesel has already peaked in Europe and the US, which is set to be followed by China next year. Overall, the demand for fuel will peak at 49 million bpd in 2027 before starting an irreversible decline.
The prediction vindicates the strategy of oil majors like BP to diversify their operations to include low-carbon projects. In addition to making the Castrol ON range of lubricant and coolant products for EVs, BP is investing in its network of EV charging points.
EVs are currently only displacing about 2 million bpd of oil demand, but Bloomberg expects this to rise to 20 million by 2040. While EVs will clearly be the biggest counter to oil demand, shared mobility and constant improvements in the fuel efficiency of internal combustion engines will also affect this figure.
