Worldwide demand for oil to decline through 2028, new report

A new report from the International Energy Agency confirmed that high prices and security of supply concerns caused by the global energy crisis has shifted the world towards renewable energy.

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In the coming years, the world’s demand for oil is predicted to decline and almost come to a halt by 2028. A new report from the International Energy Agency confirmed that high prices and security of supply concerns caused by the global energy crisis is shifting the world towards renewable energy faster.

The report titled, Oil 2023, forecasts “global oil demand will rise by 6 percent between 2022 and 2028 to reach 105.7 million barrels per day (mb/d),” but despite this cumulative increase, “annual demand growth is expected to shrivel from 2.4 mb/d this year to just 0.4 mb/d in 2028, putting a peak in demand in sight,” a press release from International Energy Agency (IEA) said.

“The shift to a clean energy economy is picking up pace, with a peak in global oil demand in sight before the end of this decade as electric vehicles, energy efficiency and other technologies advance,” Fatih Birol, IEA executive director, said.

While the aviation and petrochemical sectors are responsible for increasing global oil demand, the use of oil for transportation is predicted to decline after 2026 because of “the expansion of electric vehicles, the growth of biofuels and improving fuel economy reduce consumption,” a press release from IEA said.

“Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition,” Birol said.

The report projects that major oil producers will continue their plans to build up capacity even as demand growth slows in certain sectors. This will ensure a “spare capacity cushion of at least 3.8 mb/d, concentrated in the Middle East,” a press release from IEA said. As as production cuts by the OPEC+ alliance will help to decrease global oil supplies, oil producing countries that are not part of the OPEC+ alliance are expected to dominate global oil supply, including Guyana, Brazil and the United States, with a predicted increase of 5.1 mb/d by 2028, the report stated.

And despite the IEA’s prediction for worldwide oil demand to decrease, oil and gas exploration, extraction and production investments will increase to levels not seen since 2015, EcoWatch reported.

“For total oil demand to decline sooner, in line with the IEA’s Net Zero Emissions by 2050 Scenario… additional policy measures and behavioral changes would be required,” IEA said.

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