Electrification in transport and other oil-dependent sectors is accelerating faster than previous forecasts, says Rystad Energy.
Electrification in transport and other oil-dependent sectors is accelerating faster than previous forecasts, says Rystad Energy.
The company is downgrading its peak oil demand forecast to 101.6 million barrels per day (bpd) in 2026 plateauing before falling below 100 million bpd after 2030. It previously estimated in October 2020 that oil demand would peak at 102.2 million bpd in 2028. Before Covid-19 Rystad had predicted peak oil demand of just over 106 million bpd in 2030.
Oil demand will be whittled away mainly by a growing electric vehicle (EV) market. Other tectonic shifts will be a growing share of hydrogen in the petrochemical sector, and oil substitution in power, agriculture, and maritime sectors. There will still be thriving oil demand in other sectors in the mid-term, such as trucks, maritime, petrochemicals and aviation in the long term.
‘Oil demand will evolve in three phases. Through to 2025, oil demand is still affected by Covid-19 impacts and EVs are still slow to take off, then in 2025- 2035, structural declines and substitution impacts, especially in trucks, take hold, and then finally, towards 2050, the recycling of plastics and accelerated technologies in maritime will be the final transition leg bringing oil demand down towards 51 million bpd in 2050 in our mean case,’ said Sofia Guidi Di Sante, oil markets analyst at Rystad Energy.
Road transport (passenger vehicles, buses and freight), which makes up more than 48% of oil demand, will be the ultimate driver of the transition. The swiftest transition is well underway in the electric passenger vehicle sector, which makes up 6% of global vehicle sales, but will account for 23% by 2025 and then accelerate towards 96% penetration by 2050.
Trucks, which account for 18% of total demand, will electrify in the mid-2030s. Buses will also undergo a gradual transition from petroleum diesel to electric and biofuels. The EV truck market share will rise to 6% in 2025, 21% in 2030, and 61% in 2040.
Petrochemicals, which make up 14% of total oil demand, are expected to grow until at least the mid-2030s as plastics consumption per capita grows worldwide. The demand then peaks as plastics recycling rates converge towards 75-80%, as observed in glass and metals, from the current rate of 5%, while hydrogen-sourced feedstock picks up from less than 1% today to 30% of the virgin petrochemical feedstock for LDPE, HDPE, PP and PVC plastics production in 2030.
Maritime, which makes up 6% of demand, is expected to be dominated by oil at least until the mid-2030s, after which Rystad expects to see switching to LNG, hydrogen, electric batteries, and other carbon-neutral vessels, especially in newbuilds. This sector has already undergone a big transition from high-sulphur fuel to ultra-low sulphur fuel.
Aviation, which makes up less than 7% of oil demand, is expected to continue to grow until 2050 as no viable oil substitution technology exists, although the gradual introduction of bio-jet fuel will limit pure kerosene jet fuel demand growth.
