Wood Mackenzie projects a 1.5 million b/d increase in global oil demand in 2024, with a sizable portion of this growth expected in the latter part of the year.
Amidst ongoing efforts towards achieving net-zero emissions, the persistent high demand for oil prompts questions about its future trajectory.
Wood Mackenzie addressed these inquiries with four insights on the upcoming oil demand landscape.
Key Underlying Macro-Economic Fundamentals
Economic growth and population trends are pivotal factors influencing long-term global oil demand. Wood Mackenzie’s projections indicate an average annual GDP growth rate of 2.2% from 2024 to 2050.
This forecast suggests that the world economy is on track to almost double in size, reaching $170 trillion by 2050 (measured in annual GDP using constant 2015 dollars).
Notably, China and India will drive 43% of the total global GDP growth from 2024 to 2050, while Europe and North America are set to contribute 30% to the global economic growth during this period.
For the demographic outlook, the United Nations (UN) Population Prospects 2022 report is used. According to the UN, the world’s population is projected to reach 9.7 billion in 2050, up from 8 billion in 2022.
Africa is the main driver of the population growth to 2050 while China and Europe slip into a declining trend for their populations. In Wood Mackenzie’s long-term forecast, oil demand in Africa will show growth by 2050.
“These economic and demographic trends should exert significant upward pressure on liquid demand. However, intensifying efforts toward decarbonization, away from oil, counterbalance this upward force, ultimately leading to a plateau and then a decline in oil demand,” said Ann-Louise Hittle, Vice President, Oil Markets.
Electrification of Transport
The timing and scale of the global peak in oil demand and the ensuing demand reduction are intrinsically linked to the trajectory of EV sales.
According to Wood Mackenzie, for light passenger vehicles, the total share of EVs (BEVs and PHEVs) in new car sales globally is projected to climb from 18% in 2023 to 45% by 2033, with leading positions held by China, Europe, and the US.
“By 2050, EVs are projected to constitute over two-thirds of global car sales and more than half of the car stock. For the US, although the EV sales share is revised down from 21% to 14% for 2025, EVs are expected to account for over 50% of new light passenger vehicles by 2033, then surpassing 80% by 2050. Overall road sector demand is expected to reach a peak by 2029, followed by a long-term decline,” said Ann-Louise Hittle.
Although aviation oil consumption is projected to rise until the end of the 2030s, a peak is anticipated in the mid-2020s for marine oil use.
LNG is poised to play a significantly larger role in the shipping industry compared with other transportation sectors, while mandated fuel efficiency standards by the International Maritime Organization (IMO) also start to erode fuel demand.
“In these hard-to-abate sectors, electrification is considerably more challenging compared to the road sector. Electric vehicles are expected to have a much smaller role, due to the much higher power-to-weight ratio typical for planes and ships. Nevertheless, electrification is expected to develop to some extent in the short-haul aviation and short-sea shipping markets, where distances are much lower,” said Gelder.
“Key routes for decarbonization in hard-to-abate sectors focus on liquid renewable fuels. Sustainable aviation fuel (SAF) will play a key role in lowering the carbon footprint of aviation. As demand for biofuels declines in the road sector due to increasing electrification, we expect aviation to exert the greatest pull-on biofuel volumes, paying a higher premium compared to other transport sectors. As for shipping, we expect the pull for biofuels to be weaker compared to aviation, and renewable fuels of a non-biological origin (RFNBOs) to be an important means of decarbonizing shipping. These fuels include the likes of e-ammonia, and e-methanol, which are expected to appear as alternative shipping fuels within the next decade.”
“Petrochemical demand per capita tends to have an S-curve linkage with GDP per capita. Europe and North America are at the top of the S-curve with demand growth intricately linked to GDP growth. For emerging economies, rising incomes deliver rapid petrochemical demand growth once the income thresholds on household appliance and vehicle ownership are breached. This convergence of petrochemical usage delivers demand growth at rates higher than global GDP growth for the medium term. However, as usage converges, demand growth slows to GDP levels and the impact of policies/regulations and recycling reduces growth further over the long term. By 2050, petrochemical feedstock demand is projected to be almost 50% larger than 2023 levels,” said Hittle.
Source: OGJ.com
