In its report titled Global Energy Perspective 2022, global management consulting company McKinsey & Company said that the demand for crude oil could peak within two to five years, being driven by a drop in the use of petrol and diesel for road transport.
The projection broadly agrees with that expressed in the Energy Outlook 2021 published by TotalEnergies, the maker of the Total lubricant range. This estimated demand plateauing by 2030 before going into a strong decline. The shift to electric vehicles will be partly responsible for the decline in demand.
In the report, McKinsey said:
“Liquids demand in road transport is projected to decline 75% by 2050 after peaking in the early 2020s, driven by slowing growth in the number of cars on the road, increased efficiency, and accelerating uptake of electric vehicles (EVs), with bio- and synfuels decreasing demand for crude oil further.”
A drop in demand is inevitable as the world transitions to more renewable power sources, which is why traditional oil majors like Shell and BP plan to diversify away from hydrocarbons, although some production will continue for some time. For example, the chemicals sector still has potential for growth. Despite increasing recycling and pyrolysis putting some downward pressure on demand for petrochemicals, it is projected to increase overall by 50% by the middle of the century. What is more, even electric vehicles need lubricants to function efficiently.
McKinsey notes, however, that the study was conducted before Russia’s invasion of Ukraine, which may affect its prediction.