By Vandana Gombar, Senior Editor, BloombergNEF
Global oil demand is set to reach a new record high this year, with over 102 million barrels consumed every single day, almost half of it by vehicles.
So far, the growing fleet of electric cars, vans, trucks and buses has displaced just a sliver of demand – 1.5 million barrels of oil per day in 2022. But batteries are on the march, and BloombergNEF is now predicting peak demand for road fuel isn’t that far off, arriving in 2027.
“A combination of EVs, fuel efficiency and shared mobility is knocking down demand for road fuels,” said David Doherty, head of oil and renewable fuels research at BNEF. “This decline gets exacerbated post-2030.”
Oil consumption displaced by EVs rises to over 20 million barrels per day by 2040, according to BNEF’s Economic Transition Scenario, which models a market-led energy transition that assumes no policy changes. That is more oil than the US consumed last year.
Demand for road fuels peaks at 49 million barrels per day in 2027. “From then on, demand begins to decline structurally, reaching 35 million barrels per day by 2040,” BNEF said in its most recent outlook.
The demand for gasoline and diesel for road transport has likely already risen as far as it’s going to go in the US and Europe, while demand in China is set to peak in 2024. Demand in other major consuming countries like India starts to decline later — in the 2030s.
Market interventions could materially alter the speed of this transition. A higher oil price for instance makes EVs that much more competitive compared to a conventional combustion vehicle, and prices have just hit their highest level for the year.
The concerted push by the Organization of the Petroleum Exporting Countries to elevate the price of oil up is yielding consequences it might not enjoy.
Transitioning oil companies
Meanwhile, oil and gas companies are getting ready for a world which will require lower volumes of their product. BNEF’s scoring of oil majors based on their preparedness for a world aspiring to net-zero emissions shows that the Europeans are in the lead, with Norway’s Equinor ranked highest in 2023, followed by BP.