According to the latest medium-term market report from the International Energy Agency (IEA), the growth in global oil demand is expected to decelerate significantly in the coming years.
The report highlights that high prices and concerns over supply security, exacerbated by the ongoing global energy crisis, are accelerating the transition towards cleaner energy technologies.
The Oil 2023 report predicts that based on current government policies and market trends, global oil demand will increase by 6 percent between 2022 and 2028, reaching a daily average of 105.7 million barrels.
This growth will be primarily driven by robust demand from the petrochemical and aviation sectors.
However, despite this cumulative increase, annual demand growth is projected to dwindle from 2.4 million barrels per day in the present year to just 0.4 million barrels per day in 2028, indicating that a peak in demand is on the horizon.
One significant factor contributing to this decline is the expected decrease in oil consumption for transportation fuels. The report suggests that after 2026, the expansion of electric vehicles, the rise of biofuels, and advancements in fuel efficiency will lead to a reduction in oil usage for transportation purposes.
This outlook reflects the global energy landscape’s ongoing transformation, as countries strive to reduce greenhouse gas emissions and transition to more sustainable energy sources. The IEA report underscores the need for continued efforts in promoting cleaner energy technologies and implementing supportive policies to facilitate the energy transition.