- Global oil demand will peak before 2030 at 102 mbd, driven by sectors like petrochemicals, aviation, and shipping.
- Demand growth in South America, Africa, the Middle East, and Eurasia offset the decline in North America and Europe.
- Middle Eastern production remains stable while other regions see a decline, especially by 2050.
Under the IEA’s Stated Policies Scenario, global oil demand is expected to peak at just under 102 mbd by 2030, a 3 mbd increase from 2023. Key drivers include petrochemicals, aviation, and shipping, reports Gibson.
Projected Decline in Oil Demand
Declines in buildings and power demand offset this increase, with a notable 2.4 mbd reduction in consumption due to efficiency improvements and alternatives.
After the 2030 peak, global oil demand is set to gradually decline to 93.1 mbd by 2050, around a 9% decrease from 2030. Road transport demand drops sharply due to EV uptake, while declines in building and power usage continue.
Demand in petrochemicals, aviation, and shipping, however, remains resilient, partly balancing other sectoral reductions.
Regional Shifts in Demand
Advanced economies in North America and Europe are anticipated to see oil demand drop by 14.4 mbd by 2050.
South America, Africa, the Middle East, and Eurasia are projected to partially offset the decline, with continuous demand growth in these regions.
In Asia, demand stays steady, with China’s consumption decrease balanced by growth in other Asian economies.
Supply Adjustments Focus on Middle Eastern and Latin American Production
Oil production is expected to decrease globally by around 14 mbd by 2050, except in Latin America and the Middle East.
The decline in regional production could lead to increased reliance on Middle Eastern crude, with significant crude trade flows projected to continue toward Asia.
Impacts on the Global Refining Industry
Refining activity will decrease in Europe and North America due to declining demand for road transport fuels, with refining running down by 4.3 mbd and 2.6 mbd, respectively, by 2050.
Growing oil demand in Latin America and Africa presents potential export opportunities for US Gulf refiners, who may shift focus to these markets.
Asia’s refining demand is expected to peak in 2035 before leveling off to 2023 levels by 2050.
Tanker Trade to Remain Critical
Despite an overall demand decline, regional differences in supply and demand will sustain tanker trade, especially as Middle Eastern crude exports to Asia and Latin America continue to grow.
Outlook for VLCC and Suezmax Rates
In the Middle East, VLCC rates dropped, with AG/China at WS52, and minimal demand is expected to maintain this pressure.
West Africa Suezmax rates remain steady at WS95, but a well-stocked tonnage list limits upward pressure.
Aframax and Panamax Market Trends
Aframax rates in the Mediterranean dropped sharply due to low seasonal demand, yet potential weather delays could stabilize rates in the coming weeks.
Panamax rates in North America are stable, with high demand and limited tonnage supporting rates at WS130, although a slowdown is anticipated.
Clean and Dirty Product Tanker Rates
Clean tanker rates in Asia and the Mediterranean saw a downtrend as tonnage oversupply met minimal demand. Rates on popular routes, such as AG-Japan, continue to soften.
Dirty product rates held steady in North Europe, while oversupply in the Mediterranean pushed rates down, particularly for cross-med runs.
Bunker Price Movements
Week-on-week, bunker prices declined across major ports, with Rotterdam VLSFO dropping to $521/ton and Singapore VLSFO to $585/ton. These changes reflect the downward trend in oil markets.
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Source: Gibson
