A slower pace of the energy transition will push peak oil demand beyond 2030, according to the world’s biggest independent oil trader, Vitol Group. “Oil demand has a good few number of years still to climb … before it plateaus,” Vitol’s chief executive Russell Hardy said at the International Energy Week in London, as carried by Reuters.
Overall global demand for oil, natural gas, and coal is also set to peak later than expected as the energy transition is progressing slower than initially thought, according to the executive. Vitol’s view on peak oil demand is several years later than the International Energy Agency (IEA), which advocates for a faster energy transition and has insisted for half a year now that global oil demand will peak before 2030.
According to the Paris-based agency, demand for all fossil fuels – oil, natural gas, and coal is set to peak before 2030, undermining the case for increasing investment in fossil fuels. Vitol, however, says that the energy markets have changed in recent months and peak oil wouldn’t occur this decade.
“We agreed with that view 12-24 months ago, but we are of the view now that the pace of change is more challenging so it is likely to drift into the early 2030s,” Vitol’s Hardy said at this week’s conference, as carried by City The pace of change has been challenged by higher interest rates, supply-chain woes, and low returns for renewable project developers, and a public backlash against some governments imposing more expensive choices to consumers for their energy supply.
The energy transition is happening, but it will not happen as fast as environmental zealots would have liked. Therefore, oil and gas consumption will continue to grow, even if the pace of growth may have peaked. Most analysts and banks expect peak oil demand in the early 2030s, as Vitol does now. The IEA’s “beginning of the end for fossil fuels” this decade is not shared by many.
OPEC, which has a vested interest in continued oil demand growth for decades, sees robust demand even in the long term. The cartel last year raised significantly its long-term estimate in its latest annual World Oil Outlook, with global oil demand seen at around 116 million barrels per day (bpd) in 2045, up by 6 million bpd compared to the previous assessment from 2022.
OPEC expects global oil demand to increase by more than 16 million bpd between 2022 and 2045, rising from 99.6 million bpd in 2022 to 116 million bpd in 2045. Even as China’s demand growth slows, India will emerge as the top driver of global oil consumption growth, according to OPEC and many other forecasters, analysts, and investment banks.
India’s strong economic growth in the medium term would raise oil demand, as will continued urbanization and industrialization, analysts say. OPEC said in its latest annual outlook that India would be the driver of oil demand growth through 2045, expecting to add 6.6 million bpd to oil demand by then.
With India driving oil demand growth and policymakers recalibrating their approach to energy transition pathways, peak oil demand is unlikely to happen this decade, OPEC Secretary General Haitham Al Ghais wrote in an article published on OPEC’s website last month. “Today, what is clear is that peak oil demand is not showing up in any reliable and robust short- and medium-term forecasts,” Al Ghais said.
Peak oil demand will not happen by 2030, OPEC’s Al Ghais wrote, due to policymakers re-evaluating their approach to energy transition pathways and pushback from consumers. Faster industrialization in developing countries and the emergence of a larger middle class there, an expansion in transport services, and greater energy demand and access are also factors preventing peak oil demand this decade, according to OPEC’s secretary general.
“After all, crude oil and its derivatives are a constant presence in our daily lives, bringing vital everyday products, and helping to deliver on energy security and energy access in a widely available and affordable way,” Al Ghais wrote.“Time and again, oil has defied expectations regarding peaks. Logic and history suggest that it will continue to do so.”
Source:https://oilprice.com