Peak oil demand "on the horizon"
The International Energy Agency sees global oil demand growth slowing "markedly" in coming years, with a peak "on the horizon."
Driving the news: The IEA's new five-year outlook sees worldwide use rising 6% to 105.7 million barrels per day in 2028.
- But the pace of growth is expected to slow greatly (see above).
- It's a window into the agency's thinking with energy markets being wildly turbulent for unpredictable reasons, i.e. COVID-19 and Russia's war on Ukraine.
Why it matters: The trajectory of oil consumption affects carbon emissions, investment strategies and geopolitics, among other things.
Zoom in: Petrochemicals used in plastics and other products are a major source of demand growth in the forecast. Aviation fuel is, too.
- But demand for road transport fuels goes into reverse starting around mid-decade.
The big picture: Theories about "peak oil" supply once dominated energy economics discussions for decades but never came to fruition.
- More recently, climate change has driven more attention to when demand might peak.
What they're saying: A rapid shift to a "clean energy economy" is driving the latest outlook, IEA head Fatih Birol said in a statement.
- An oil demand peak is "in sight before the end of this decade as electric vehicles, energy efficiency and other technologies advance."
What we're watching: The supply picture, which the IEA says could "significantly tighten" in coming months. But the outlook improves during the wider analysis window that runs through 2028.
- The Russia-Ukraine crisis has sped up "clean" energy investment and oil capacity.
State of play: The IEA sees markets "adequately supplied throughout our forecast period" — assuming recent increases in upstream investment are maintained.
- The U.S. leads supply growth, though increases will slow after this year.
Reality check: Take all this with a grain — or boulder — of salt! Supply and demand are notoriously hard to game out.
- And what happens after a peak — a plateau, a gradual decline, or a steep one — matters even more.