Global oil demand peaks towards the end of this decade at around 102mn b/d then remains broadly at that level for the following two decades, according to the IEA's baseline scenario in its latest World Energy Outlook (WEO).
The IEA's Stated Policies Scenario (STEPS), which is based on prevailing policies worldwide, sees global demand — excluding biofuels — rising from 96.5mn b/d in 2022 to 101.5mn b/d in 2030. This is 900,000 b/d below last year's scenario for 2030. From then on oil consumption begins a long but slow decline, falling by just over 4mn b/d to 97.4mn b/d in 2050.
The IEA puts the downward revision from last year's WEO mainly down to the "astounding rise in electric vehicle sales" which is now affecting oil demand for road transport. While demand for use in petrochemicals, aviation and shipping continues to grow up to 2050, this is not enough to offset falls in demand for road transport, along with the power and buildings sectors, the IEA said.
The IEA's baseline scenario is in stark contrast to that of Opec, which earlier this month massively raised its global oil demand projection up to 2045.
The WEO explores two other scenarios — the Announced Pledges Scenario (APS) assumes government targets on emissions are met in full and on time, and the Net Zero Emissions by 2050 Scenario (NZE) lays a path to limit global warming to 1.5°C.
In APS, oil demand falls to 92.5mn b/d by 2030 and 54.8mn b/d by 2050, led by sharper declines in oil demand for road transport with "EVs accounting for more than 75pc of passenger car and truck sales in 2050." In NZE, oil demand falls to 77.5mn b/d by 2030 and 24.3mn b/d in 2050.
On the supply side, the STEPS scenario sees US tight oil output increasing by 2mn b/d between 2022 and 2030, to around 9.5mn b/d. Output peaks soon after and falls to around 8.5mn b/d by 2050. Other major additions come from Brazil and Guyana, with the latter boosting output to 2mn b/d by the mid 2030s. Opec production rises by just 1mn b/d by 2030, as African members' contributions fall by 1.5mn b/d. Opec's share of global oil production rises from 36pc in 2022 to 42pc in 2050.
Russian production falls by around 3.5mn b/d between 2022 and 2050 "as it struggles to maintain output from existing fields or to develop large new ones."
Tense Middle East
The IEA said some of the immediate pressures from the global energy crisis had eased, but it called attention to "unsettled" energy markets, geopolitics and the global economy.
"A tense situation in the Middle East is a reminder of hazards in oil markets a year after Russia cut gas supplies to Europe," the IEA said. "This underscores once again the frailties of the fossil fuel age."
The agency said oil and gas investment now is almost double the level required under the NZE scenario. It expects this to come in at around $800bn in 2023, broadly in line with the level needed in STEPS to 2030, that "industry today does not see a significant near-term reduction in demand as likely."
STEPS sees energy-related CO2 emissions peaking in the mid-2020s but emissions remain high enough to increase global average temperatures to around 2.4C in 2100.
"Bending the emissions curve onto a path consistent with 1.5C remains possible but very difficult," the IEA said.
