In its latest medium-term report, the International Energy Agency has predicted that the growth in the global demand for crude oil will slow in the coming years, with demand potentially peaking in 2028.
The IEA bases its forecasts on market trends and prevailing government policies. While demand this year is expected to grow by 2.4 million barrels per day (bpd), the annual increase will taper to reach just 0.4 million bpd in 2028. By this point, overall global demand will have reached 105.7 million bpd, a rise of 6% on 2022 levels.
The use of oil for transport will peak even sooner in 2026, due to advancements in fuel efficiency, low-carbon biofuels and the proliferation of electric vehicles. Nevertheless, a reduction in demand from advanced economies will be offset by strong demand growth in developing and emerging economies, at least in the short term.
Fatih Birol, the Executive Director of the IEA, said that the transition to an economy based on clean energy was accelerating:
“…with a peak in global oil demand in sight before the end of this decade as electric vehicles, energy efficiency and other technologies advance. Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition.”
Traditional oil producers like BP, the maker of Castrol lubricant and coolant products, have already formulated strategies to invest more in green energy products, although some have moved back cuts in oil production following the disruption caused by Russia’s invasion of Ukraine.