The increased promotion of electrification in transport and other oil-dependent sectors is set to chip away at oil sooner and faster than expected, Norwegian energy intelligence firm Rystad reported.
Rystad Energy said on Wednesday it was downgrading its peak oil demand forecast to 101.6m bpd, a pinnacle that will come in 2026, two years earlier than thought, plateauing before falling below 100m bpd after 2030.
In its updated base case, Rystad sees oil demand whittled away mainly by a growing electric vehicle (EV) market. Aside from the staggering takeover of EVs, assumptions across all Rystad’s scenarios see oil demand being either phased out, substituted, or recycled across a range of sectors.
According to Rystad, the maritime sector will still see thriving oil demand in the mid-term. The sector, which makes up 6% of demand, is expected to be dominated by oil for at least through the mid-2030s, after which Rystad expect to see switching to LNG, hydrogen, electric batteries, and other carbon-neutral vessels, especially in newbuilds.
“Oil demand will evolve in three phases. Through 2025, oil demand is still affected by Covid-19 impacts and EVs are still slow to take off, then from 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 further down towards 51m bpd in 2050,“ said Sofia Guidi Di Sante, oil markets analyst at Rystad Energy.