News Detail

Key points

• Oil demand in 2024 outpaces expectations.
• IEA forecasts a 1.3 million barrel/day rise in 2024 oil demand.
• EVs are seen as a future threat, but growth may stall.
• Strong US economy, rerouting, and growth sectors drive demand.
• Peak oil timing uncertain with industry scepticism on forecasts.

The oil sector worldwide is booming with newfound confidence as oil demand in 2024 continues to surpass forecasts. This increase in demand raises the issue of when the world could eventually approach peak oil consumption, a crucial turning point in the energy transition, despite the growth of renewable energy sources and electric cars.

At a major industry meeting, the annual CERAWeek by S&P Global conference in Houston, executives gave a favourable assessment of the future of oil. The CEO of Saudi Aramco, the biggest oil producer in the world, Amin Nasser, stressed the need to give up on the "fantasy" of gradually phasing out gas and oil in favour of continuing investment based on "realistic demand assumptions." His speech was met with enthusiastic applause from attendees, reflecting the dominant sentiment within the industry.

The CEO of Vitol SA, the biggest oil trader in the world, Russell Hardy, agreed. Hardy retracted his company's projection of the peak oil consumption to the early 2030s, citing lowered expectations for the deployment of electric vehicles.

A key voice in the global energy scene, the International Energy Agency (IEA), likewise sees a sustained rise in oil demand. Although it is less than the remarkable gain of 2.2 million barrels last year, fueled by China's post-pandemic economic rebound, their prediction indicates a rise of 1.3 million barrels per day in 2024, which is still a big increase.

According to projections, the average daily demand for oil this year is expected to be a record-breaking 103.2 million barrels. According to the IEA, the strong US economy and the longer shipping routes resulting from rerouting around the Suez Canal are the main causes of this increase.

The IEA's prediction, which indicates that oil consumption would peak before the end of the decade, appears to be excessively conservative, according to the industry itself. Oil traders such as Trafigura and Gunvor Group predict an even greater rise in demand for 2024. Trafigura's chief economist, Saad Rahim, points to the US economy's unexpected resilience as a major factor behind the company's outperformance. The increase in oil prices has been directly attributed to this strong consumption; benchmark Brent crude oil futures have increased 11% this year and have once reached above $87 per barrel.

Certain industries are seeing exceptionally high demand. According to Vitol, the Red Sea conflict alone has caused ship rerouting, increasing world demand by 100,000 barrels per day. Two other notable growing categories are polymers and jet fuel.

Furthermore, a significant contribution is anticipated from India, which is predicted to be the world's single greatest source of increase in global demand between now and 2030. In the next fiscal year, the Indian government expects the economy to grow by 7%, maintaining its status as one of the major countries developing at the quickest rate.

"Oil demand has stayed very strong, both in the US and other countries, developed and emerging alike," confirms Helen Currie, chief economist at US oil producer ConocoPhillips. "We're looking at another record high in world demand this year across the board."

The persistent relationship between economic expansion and the growing demand for oil-based goods like gasoline and diesel is the key driver in postponing peak oil consumption. Although data from BloombergNEF indicates that EV sales growth will slow down in the coming years, the advent of electric cars, especially in China, poses a danger to the world's oil consumption in the future. In the meantime, an increasing number of cars and trucks are running on petrol and diesel overall.

"We see demand increasing throughout this energy transition," stated Sheikh Nawaf Al-Sabah, CEO of Kuwait Petroleum Corp. This unwavering belief in continued demand growth explains why the Middle Eastern nation plans to expand its oil production capacity.

The oil industry anticipates continuous demand growth despite the emergence of other energy sources, indicating the complexity of the global energy situation. Although a peak in oil use is probably coming, no one knows when it will happen. BSO will keep you informed about the most recent advancements in this dynamic energy sector.