Slower demand for road transport could see oil demand peaking in the next two to five years, McKinsey & Company said in its new Global Energy Perspective 2022 report.
The uptake of electric vehicles is the main driver for stagnating growth in oil demand, according to McKinsey, which sees global liquids demand peaking around 102 million barrels per day (bpd) in the next two to five years, despite a near-term recovery of oil demand from the impacts of the pandemic. The analysis, however, was conducted before the Russian invasion of Ukraine, McKinsey notes in the report.
“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,” McKinsey said in the report.
The chemicals sector will remain one of the few growth avenues for oil demand. Chemicals-driven demand is set to jump by 50 percent by 2050, despite increasing downward pressure from demand reduction, recycling, and pyrolysis, the report noted.
McKinsey’s analysis – with the caveat that it hasn’t included the war in Ukraine and the fallout of the Russian invasion on global economy, energy markets, and supply chains – presents one of the most pessimistic outlooks on oil demand growth among analysts, industry, and oil investors.
Global oil demand will plateau before the end of this decade and decline strongly after 2030, TotalEnergies said in its Energy Outlook 2021 unveiled in the autumn of 2021. Previously, TotalEnergies had expected peak oil demand at some point around 2030, with a slow decline after that.
Oil investors surveyed by Bloomberg Intelligence in November have significantly recalibrated their expectations of peak oil demand over the past two years. Two and a half years ago, a fifth of oil investor clients polled by Bloomberg Intelligence said that oil demand would peak by February 2021, BloombergNEF’s Chief Content Officer Nathaniel Bullard notes. In the November 2021 survey, just 2 percent of oil investors believed peak oil demand would occur by 2025, and fewer than 40 percent saw that peak before 2030.
By Tsvetana Paraskova for Oilprice.com