LONDON (Reuters) – Electric vehicles and more fuel-efficient technology will reduce demand for oil by 2040, but the world may still face a supply crisis without sufficient investment in new production, the International Energy Agency (IEA) said on Tuesday, market.
Demand for oil is not expected to peak before 2040, the IEA said in Paris in its 2018 World Energy Outlook. The central scenario of the IEA is that demand grows about 1 million barrels per day (bpd) on average every year by 2025, before stabilizing at a fixed rate of 250,000 bpd by 2040 when it reaches a peak of 106.3 million bpd.
"In the New Policy Scenario, demand in 2040 was revised by more than 1 million bpd compared to last year's outlook, largely due to faster short-term growth and changes in fuel efficiency policies in the United States" , the agency said.
The IEA believes there will be about 300 million electric vehicles on the road by 2040, no change in its estimate a year ago. But now you expect these vehicles to cut
demand of 3.3 million bpd, up from an estimated loss of 2.5 million bpd in its latest World Energy Outlook.
"Efficiency measures are even more important to stem the growth of oil demand: improvements in fleet efficiency of non-electric cars prevent more than 9 million barrels per day of oil demand by 2040," the IEA said.
Oil demand for road transport is expected to reach 44.9 million bpd by 2040, up from 41.2 million bpd in 2017, while industrial and petrochemical demand is expected to reach 23.3 million bpd by 2040, from 17.8 million bpd in 2017.
All growth in global oil demand will come from developing economies, led by China and India, while demand in advanced economies is expected to fall by more than 400,000 bpd on average each year by 2040, the IEA said.
The IEA, which advises Western governments on energy policy, has maintained that the global car fleet will nearly double by 2040 as of today, rising 80 percent to 2 billion.
On the supply side, the US, already the world's largest producer, will dominate production growth by 2025, up 5.2 million bpd from current levels of about 11.6 million bpd. From then on, the IEA expects US oil production to decline and OPEC's market share to rise to 45 percent by 2040, from close to 30 percent today.
New sources of supply will be needed if demand hits peaks, the agency said.
"The analysis shows the growth of oil consumption in the coming decades, due to the growing demand for petrochemicals, trucks and aviation. But meeting this growth in the short term means that approvals for conventional oil projects need to double
current levels, "said IEA director Fatih Birol.
"Without this resumption in investment, US shale production, which is already growing at a record pace, would have to add more than 10 million bpd today to 2025, the equivalent of adding another Russia to the global supply in seven years. which would be a historically unprecedented feat. "