- Global oil demand will peak around 2040, the International Monetary Fund (IMF) said in a new report on the future of oil.
- “Growth of global oil demand will significantly decelerate, and its level could peak in the next two decades,” the IMF said in its report entitled “The Future of oil and fiscal sustainability in the GCC Region.”.
- This could have a “significant” impact on oil-exporting countries in the Middle East whose “existing financial wealth could be depleted in the next 15 years.”
Global oil demand will peak around 2040 â or “much sooner” â the International Monetary Fund (IMF) said in a new report on the future of oil.
The IMF said that this could have a “significant” impact on oil-exporting countries, predominantly those in the Middle East whose existing financial wealth could be depleted in the next 15 years if major reforms aren’t undertaken.
“Growth of global oil demand will significantly decelerate, and its level could peak in the next two decades,” the IMF said in its report entitled, “The Future of oil and fiscal sustainability in the GCC Region,” published Thursday.
The IMF said analysis of past oil market developments revealed “a strong and sustained declining trend in the global oil demand, after accounting for income and population growth.”
This reflected a range of factors, the IMF said, such as long-term improvement in energy efficiency and substitution away from oil, trends that had so far been “veiled by the effects of economic and population expansion.”
“But it is poised to become more visible in the coming years, resulting in a path of gradually slowingâand eventually decliningâglobal demand for oil. The latter would peak by around 2040 in our benchmark projection or much sooner in scenarios of stronger regulatory push for environmental protection and faster improvements in energy efficiency.”
Growth of global demand for natural gas is also expected to slow, the Fund said, “although it is expected to remain positive in the coming decades.”
The IMF is not the first to make predictions about a decline in global oil demand. In late 2019, Neil Atkinson, head of the oil industry and markets division at the International Energy Agency, told CNBC that population growth remained the key driving force for oil demand, which he said could peak in the 2030s.
“If we have a much more business-as-usual (approach) with much more limited (environmental) policy implementation then the profile of oil demand will be of continued growth. But if the world does implement policies more rigorously, as it’s showing signs of doing today, then the peak could come in the late 2020s, 2030s,” he said.
“We don’t know that but we do know though is that even when oil demand does peak at some point in the future, it isn’t going to drop off a cliff because substitute-ability for oil in so many sectors is still elusive â shipping, aviation, trucking, petrochemicals â there are still huge driving forces (for oil demand),” Atkinson told CNBC’s Squawk Box Europe in November.
He said Saudi Arabia, the second largest oil producer in the world after the U.S. and ahead of Russia, was a cornerstone of that future oil supply. “There’s going to be rising demand for at least the next decade for oil products, possible longer, and this is cementing their role as the cornerstone player in global markets, the most reliable and biggest supplier in markets,” he said.