Global oil demand growth to 'decelerate' with electrification and efficiency - IEA

The International Energy Agency (IEA) estimates that global oil demand growth will "almost come to a halt" by 2028.

PHOTO: Getty Images

The Paris-headquartered agency forecasts that global oil demand growth will slow from a record high of 2.4 million b/d this year to 860,000 b/d next year.

This demand growth decline will be caused by a deteriorating macroeconomic situation and a waning recovery from the post-pandemic crisis, it argues. “The impact of the unprecedented monetary policy tightening can further curtail activity and limit advanced economies to a second year of subpar growth in 2024.”

Going ahead, this growth will "decelerate" even further, the IEA predicts. Oil demand will grow by just 400,000 b/d in 2028 – a staggering 2 million b/d below this year’s projections.

The IEA has attributed this drastic decline to the fact that the transportation sector is expected to consume significantly less oil after 2026. This is due to an increase in electric vehicles and alternative fuels such as biofuels, as well as efficiency gains and an “improving fuel economy”.

“Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition,” the IEA’s executive director Fatih Birol says.

By Konica Bhatt

Please get in touch with comments or additional info to news@engine.online