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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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McKinsey: Oil Demand Peak Could Be Two To Five Years Away

  • McKinsey: uptake of electric vehicles is the main driver for stagnating growth in oil demand.
  • McKinsey: global liquids demand to peak around 102 million barrels per day within 2-5 years.
  • The chemicals sector will remain one of the few growth avenues for oil demand.

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


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  • James Hilden-Minton on April 26 2022 said:
    Demand has already peaked in 2019 at 100.21 Mbpd, and crude production peaked a year earlier, 2018. With Brent north of $100/b for the next year or two it is doubtful that any new peak will be set.

    Once new EV product trebles past 20M/year, there is almost no chance of setting a new demand peak. EVs hit 6.5M in 2021. By 2024, they easily exceed 20M. And high gasoline prices just adds fuel to the fire.

    So if there is no new peak in 2023 or 2024, then 2019 will stand as the year when oil demand peaked. For the past five years I've been predicting that oil demand would peak by 2025. Turns out I've been too optimistic. Most likely the peak will remain 2019.
  • Alan Dr on April 27 2022 said:
    Many expert comments here again and again told us there was only 10 million electric cars made in the world by 2019 since 2010 and this was to prove how small the number of electric cars is.
    These experts should add to that now that there was another 10 million added to the world car park by the end of 2021.
    This year it seems very likely that there will be 10 million build and sold.
    It is very simple when we deal with exponential growth, to get from 1 to 100% takes 7 times a doubling.

    Wish you all a lovely day
  • DoRight Deikins on April 30 2022 said:
    I hope they're correct that oil peaks in a few years or has already peaked, but in my opinion, only a fool opines the time of peak oil, either supply or demand. It has proved many a fool so far. I read what was considered one of the authoritative power engineering textbooks from the 70s that opined that peak oil discovery would be in the early 80s and peak oil usage would quickly follow. Ahh, yes!

    All these EVs on the road, where will they get their power - mainly from the grid. Where will the grid get its power, a substantial percentage from renewable, but in absolute terms, because renewables are unreliable, still a large percentage from fossil fuels. And tell me, is a ICE vehicle more or less efficient than a EV vehicle that gets its power through a grid with all its losses and generated by fossil fuels in a central generating plant with its inefficiencies (though significantly more efficient than an ICE).

    So yeah, I can see peak oil happening, but it won't happen until the grid is greatly expanded and renewables are greatly expanded (or there is a long term recession or depression). And the capital cost of that expansion? The capital cost of more renewable power and a much larger and more efficient grid? The prime component of capital cost is energy - which means more petroleum usage, at least for a while.

    Perhaps H2 will be the answer, I'm not sure of the efficiency of fuel cells, but I know that ammonia (one of the major potential fuels for transport and use of H2) is quite expensive in terms of energy for its production. Besides it is extremely explosive, which is why it is a key component in most terrorist bombs and is marked and tracked by organizations like BATFE (the Bureau of Alcohol, Tobacco, Firearms, and Explosives) and its ilk. If one has used nitrogen fertilizer, one would know that the key component (and cost) is the ammonia.

    So what seems to be simple, never is. Good luck with the predictions.

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