Oil demand will continue to rise at least for the next decade, and possibly longer, but it is possible that peak oil demand could come at some point in the late 2020s if governments around the world implement low-carbon policies more rigorously, Neil Atkinson, Head of the Oil Industry & Markets Division at the International Energy Agency (IEA), told CNBC on Monday.
“If the world does implement policies more rigorously, peak oil demand could come at some point in the late 2020s or in the 2030s,” Atkinson said.
The IEA isn’t putting an exact ‘date’ for ‘peak oil’ because no one knows when it will come, according to the IEA’s official.
“What we do know is even when oil demand does peak at some point in the future, it isn’t going to drop off a cliff because substitutability for oil in so many sectors is still elusive,” Atkinson said.
Shipping, aviation, trucking, and petrochemicals are still huge driving forces of oil demand, the IEA’s executive said, adding that global population growth is the driver of all these industries.
The key driving force of oil demand growth is population growth, with the global population expected to grow to some 9.5 billion in fifteen years’ time, Atkinson told CNBC. Related: Protect The Oil: Trump’s Top Priority In The Middle East
True, there are signs that oil demand growth is moderating, but “we must stress that it is still growth,” he said. Oil demand growth is moderating due to electric vehicles (EVs) and the power generation sector, where oil has already lost a big part of its share. Yet, people with rising incomes in the emerging economies will continue to buy mostly SUVs, underpinning oil demand, he said.
Analysts and top commodity traders see oil demand peaking at some point in the 2030s, but oil companies say that peak oil is nowhere in sight and there is still room to grow as demand will continue to rise in the foreseeable future.
Earlier this year, Amin Nasser, the chief executive of the world’s largest oil company Saudi Aramco, rebuked all those who predict the demise of the oil industry in the near future, saying that views that the world will soon run on anything but oil “are not based on logic and facts, and are formed mostly in response to pressure and hype.”
By Tsvetana Paraskova for Oilprice.com
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