By Adedapo Adesanya
The International Energy Agency (IEA) has said that global oil demand is expected to slow from 2025 onwards due to the improvement of fuel efficiency and the increased acceptance of electrified vehicles but is unlikely to peak in the next twenty years.
The Paris-based agency which advises Western governments on energy policy, said in its annual World Energy Outlook for the period to 2040 that demand growth would continue to increase even though there would be a marked slowdown in the 2030s.
The agency’s central scenario – which incorporates existing energy policies and announced targets – is for demand for oil to rise by around one million barrels per day (bpd) on average every year to 2025, from 97 million bpd in 2018.
Demand is then seen increasing by 0.1 million bpd a year on average during the 2030s to reach 106 million bpd in 2040.
“There is a material slowdown after 2025, but this does not lead to a definitive peak in oil use,” the IEA said, citing increased demand from trucks and the shipping, aviation and petrochemicals sectors.
Oil use in passenger cars is, however, seen peaking in the late 2020s as drivers switch to electric vehicles.
The IEA projects there will be about 330 million electric cars on the road by 2040, up from an estimate of 300 million in last year’s outlook and this will see a reduction of 4 million bpd of oil use, compared to the 3.3 million bpd forecast previously.
In term of supply, the largest increases in production are expected to come from the world’s current biggest oil producer, the United States, the world’s current biggest producer, as well as Iraq and Brazil.
US tight crude oil production is also projected to hit 11 million bpd in 2035 from 6 million bpd in 2018.
The share of oil production by members of the OPEC plus Russia is seen falling to 47 percent for much of the next ten years, a level not seen since the 1980s.
“The oil price required to balance supply and demand in this scenario edges higher to nearly 90 dollars a barrel in 2030 and 103 dollars a barrel in 2040,” the report said of the IEA’s central scenario.
The IEA sees primary energy demand growing by a quarter by 2040 with renewable energy accounting for half of the rise and gas for 35 percent.
The IEA’s central scenario also does not see energy-related carbon dioxide emissions peaking by 2040 due to economic growth and population increases.
An expected rise of just over 100 million tonnes a year between 2018 and 2040, although lower than the average rate of increase since 2010 of 350 million tonnes a year, would not be enough of a reduction to curb global temperature rises, the IEA said.
Modupe Gbadeyanka