Global oil consumption is now likely to reach a record high level of 105 million barrels per day in 2024, with oil service segments running at full capacity to meet the call. This reality can be assessed from divergent perspectives. On the one hand, the peak is lower than what was anticipated a few years ago, and in that respect it is a positive signal for global warming. On the other hand, however, the bullish oil market can be interpreted as an ill omen for meeting climate targets. Either way, current market sentiments are very positive for the global oil industry and economic returns are at record highs. But what lies in store for the remainder of this decade – continued growth or plateau and decline?

Let’s add some context to this discussion. Oil consumption in 2019 averaged 100.6 million barrels per day (bpd). If the pace of growth recorded from 2016 to 2019 had been maintained in ensuing years, consumption in 2024 would have reached 108 million bpd. But that trajectory was derailed by Covid-19, which took down oil consumption by more than 11 billion barrels – or on average 6 million bpd for the five-year period from the beginning of 2020 through 2024. Travel activity plummeted and sparked a structural change in business travel through greater adoption of virtual meetings. Seen in this context, current oil consumption levels are relatively low, and the impact of the pandemic has been beneficial for the climate. Moreover, the supply side’s ability to deliver has protected the global economy from a potentially devastating price increase that would hurt poor people the most. Here we must acknowledge that the only practical way to end the oil age is to substitute oil in end-user applications, while the supply side must deliver on the ask.

Looking ahead at the 12 main oil consumption segments, seven are probably already past their peak levels and in structural decline. These are power generation, buildings, agriculture, rail, industry, buses, and vehicles. Two other segments – road freight and maritime – are about to plateau, while three segments are poised for longer-term structural growth: aviation, petrochemical and other non-energy use like asphalt and lubricants. In the latter cases, oil molecules are used to build materials, which means less greenhouse gas emissions per produced barrel. Taken together, our analysis shows that oil consumption is likely to plateau in the period 2025 to 2030 and then decline in the 2030s, with an increasingly growing share of oil molecules used for petrochemical purposes. The math behind this shows that, even at this pace, emissions from oil can decline fast enough to be compliant with climate targets between 1.6 and 1.9 degrees. 

The global natural gas industry has been on even more of a rollercoaster ride in recent years. Global demand in 2023 managed to recover to 2021 levels, but not more. Thus, gas demand going forward must be regarded as uncertain, particularly given that solar power generation has been growing faster than anyone expected. LNG markets seem set to be loose going forward, and LNG supply after 2030 appears abundant despite the decision by the Biden administration to halt new projects in the US.

These are some of the topics we will discuss with leading external and internal experts in our Rystad Talks Energy this month. We look forward to seeing you there.