The International Energy Agency (IEA) has raised its outlook for world oil demand to a record high of 102.3 million barrels a day this year, saying it will be powered by faster-growing economies in the developing world.
In its latest medium-term market report released this week, the IEA projects global oil demand to grow 6% between 2022 and 2028 to reach 105.7 million barrels per day (bpd), up 5.9 million bpd compared to 2022 levels. That growth will be supported by strong demand from the petrochemical and aviation sectors, it said.
According to the report, around three-quarters of the increase in the six-year period to 2028 will come from Asia, with India surpassing China as the main source of growth by 2027. Oil demand in North America and Europe will be in “contractionary mode” for most of the period in light of energy transition policies, the agency said.
China, which is experiencing a post-pandemic rebound in oil demand in the first half of 2023, was projected to see demand growth slow from 2024 onward. However, the IEA noted that the global petrochemical sector will remain the key driver of global oil demand growth, with liquified petroleum gas (LPG), ethane, and naphtha accounting for more than half of the increase between 2022 and 2028 and nearly 90% of the increase compared with pre-pandemic levels. The aviation sector will also expand strongly as airline travel returns to normal following the reopening of borders, according to the report.
At the same time, the IEA indicated that annual demand growth would drop from 2.4 million bpd in 2023 to 0.4 million bpd in 2028, which would mark “a historic pivot towards lower-emission sources.”
“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,” IEA Executive Director Fatih Birol stated.
The world energy body noted that an “unprecedented reshuffling of global trade flows” and emergency releases from the strategic petroleum reserves of IEA members last year “allowed industry inventories to rebuild, easing market tensions” amid rising demand.
The IEA also said it expected investment in oil and gas exploration and production to hit $528 billion in 2023, its highest level since 2015 and an 11% increase on last year’s figure.
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