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Vitol expects global oil demand to peak around the middle of the 2030s, due to forecasts of slower uptake of electric vehicles, the world’s biggest independent oil trader said in an updated oil outlook on Monday.
Peak oil demand is pushed back to the mid-2030s, mostly due to demand from the road transport sector, other sectors remain broadly unchanged, Vitol said, noting a marked contrast with its report from a year ago, in which the trading giant had expected demand to peak in the early 2030s and then decline.
Significant shifts in policy and some economic fundamentals over the past 12 months have prompted Vitol to update its outlook.
Demand in 2040 is expected to be 5 million barrel per day (bpd) higher than today, Vitol said.
“Minimal decline during the latter part of the next decade does not reverse the continued year-on-year increase in oil use over the next few years,” the trading house said.
Decarbonization policies have taken a backseat over the past year and “Policy priorities have increasingly been reframed around economic competitiveness and geopolitical strategy,” Vitol said.
The pace of decarbonization through 2040 will depend more on availability, scalability, and affordability of practical alternatives, instead of stated targets, according to Vitol.
“This is alongside the cost and feasibility of adoption,” the oil trader said.
Over the past year, many forecasters cited changed policies and energy security as reasons for amended peak oil demand expectations.
Even the International Energy Agency dropped its predictions that oil demand growth will peak in a matter of a few years. In the latest edition of its World Energy Outlook, the IEA said oil and gas demand could continue growing until 2050.
As demand for energy grows, so will demand for the traditional sources of that energy. In a departure from its predictions of peak oil demand and peak natural gas demand before 2030, the IEA now expects oil demand to reach 113 million barrels by 2050, under the stated policies scenario that the outlet reintroduced this year after dropping it for five years to focus on aspirational scenarios focused on net zero.
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