Global oil demand is set to keep rising in the coming years before experiencing a gradual decline in 2045.
This is according to the World Oil Outlook 2045 which was launched on Monday, October 9 by the Organization of Petroleum Exporting Countries (OPEC) in Riyadh, Saudi Arabia.
According to the Outlook, a surge in global oil demand is expected by 2025 and will reach 96.4 mboe/d, marking an increase of 5.8 mboe/d from 2022 to 2025.
Looking ahead, primary oil demand is projected to rise from 90.7 mboe/d in 2022 to 102 mboe/d in 2030 and eventually to 106.1 mboe/d in 2045, constituting a notable increase of 15.4 mboe/d.
Oil remains foremost among new energies
The Outlook also highlighted the fact that although the anticipated overall increase in oil demand is somewhat overshadowed by the combined growth of solar, wind, and natural gas across various regions, the substantial existing demand for oil ensures it remains the foremost contributor to global energy needs throughout the forecasted period.
In fact, oil represented approximately 31% of the global energy demand in 2022. Its portion in the energy mix is expected to see a slight rise to nearly 32% by 2035, before a gradual decline to 29.5% by 2045.
Nevertheless, it will maintain its status as the largest individual component of the global energy mix in 2045, exceeding the share of natural gas by over 5 percentage points (pp) and being nearly three times greater than the combined contribution of solar and wind energy.
Major drivers of the trend
The Outlook identified principal factors driving this trend, they include the substantial population growth and robust economic expansion experienced by most developing countries.
According to the Outlook, the group of ‘Other Developing countries’ and India are expected to witness the most significant increases in primary oil demand, with projected increments of 9.5 mboe/d and 6.5 mboe/d, respectively.
Additionally, OPEC Member Countries are expected to make a substantial contribution to future oil demand, with significant growth projected primarily in the early part of the forecast period, followed by a slowdown after 2035. Nevertheless, overall demand growth in OPEC Member Countries is anticipated to surpass 4 mboe/d over the forecast period.
The Outlook noted that significant demand growth is also set to continue beyond the initial years of the forecast period. The overall oil demand increase between 2025 and 2030 is 5.5 mboe/d.
This incremental demand is set to decline somewhat in the second part of the forecast period, but it is still expected to be more than 2 mboe/d during the 2030–2035 period and remain in the range of 1 mboe/d during the last two five-year intervals.
Oil demand deceleration factors
On the other hand, Outlook stated that there is a combination of factors that lead to some deceleration in long-term oil demand growth. The main ones include:
- Oil substitution by biofuels
- Natural gas and electricity
- Expanding penetration of electric vehicles (EVs) in the road transportation sector
- Efficiency improvements across all sectors of oil consumption
- Shifts towards less energy/oil-intensive components in the composition of future Gross Domestic Product (GDP)
- Decelerating long-term population growth.