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Demand for oil will slow over next decade

Oil&Gas Materials 10 January 2020 15:11 (UTC +04:00)
Demand for oil will slow over next decade

BAKU, Azerbaijan, Jan.10

By Leman Zeynalova – Trend:

Subdued global economic growth and rapidly rising fuel efficiency mean that growth in demand for oil will slow over the next decade, Trend reports citing UK-based Capital Economics research and consulting company.

“What’s more, we think demand will peak in the 2030s and fall thereafter, owing to the ongoing electrification of the transport sector, subdued growth in global trade and concerns about the impact of fossil fuel use on climate change,” said the company in its report.

At the same time, plentiful oil reserves mean that supply should be ample, according to Capital Economics. “As a result, we expect real oil prices to trend down from the early 2020s to 2050.“

The company estimates that global oil use has been rising by an annual average of around 1.3 percent since 2000. “But markedly slower growth is likely in the 2020s as lighter materials and advances in engine technology lead to greater fuel efficiency in all forms of transport. “

In addition, Capital Economics expects rapid growth (admittedly from a low base) in electric, and other types of alternatively-fuelled, vehicles. “This should more than offset the positive impact on oil demand of growth in transport sectors in emerging markets in 2020-50.”

Soft global economic growth will also weigh on oil demand, Capital Economics believes.

“This is particularly the case as future economic growth is likely to be driven more by services and technology, which will not necessarily result in a proportionate increase in oil demand. The upshot is that we expect global oil demand to peak at just under 115m bpd in 2035, up from around 100m bpd now,” reads the report.

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Follow the author on Twitter: @Lyaman_Zeyn

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