Global oil demand is expected to peak between the late 2020s and early 2030s as the Russian invasion of Ukraine is accelerating investment in clean energy and governments are looking to bolster energy security with higher shares of renewables in the energy mix, BP said on Monday.
In one of the most closely-watched industry reports, the BP Energy Outlook 2023 with projections through 2050 says that oil demand falls over the outlook in all three scenarios as use in road transportation declines.
“Global oil demand plateaus over the next 10 years or so before declining over the rest of the outlook, driven in part by the falling use of oil in road transport as vehicles become more efficient and are increasingly fuelled by alternative energy sources,” BP said.
In the “New Momentum” scenario, BP’s one of three scenarios in the outlook reflecting “the current broad trajectory” of energy systems, global oil demand remains close to the current 100 million bpd by the end of this decade and drops to around 93 million bpd in 2035. The “Accelerated” scenario projects oil demand at 91 million bpd in 2030 and 80 million bpd in 2035, while the “Net Zero” scenario sees demand dropping to 85 million bpd in 2030, and further down to 70 million bpd by 2035.
The prospects for natural gas depend on the speed of the energy transition, according to BP’s outlook, which sees LNG trade growing in the near term, but the outlook becoming more uncertain after 2030.
The scenarios in Outlook 2023 have been updated to take account of the war, as well as of the passing of the Inflation Reduction Act in the United States, BP’s chief economist Spencer Dale said.
“Most importantly, the desire of countries to bolster their energy security by reducing their dependency on imported energy – dominated by fossil fuels – and instead have access to more domestically produced energy – much of which is likely to come from renewables and other non-fossil energy sources – suggests that the war is likely to accelerate the pace of the energy transition,” Dale said.
He also noted that “The scale of the economic and social disruptions over the past year associated with the loss of just a fraction of the world’s fossil fuels has also highlighted the need for the transition away from hydrocarbons to be orderly.”
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.