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Global Energy Perspective 2023: Oil outlook

 

Oil demand growth has started to show signs of slowing, and demand is expected to begin to decline by 2030 across all scenarios.

The Global Energy Perspective 2023 models the outlook for demand and supply of energy commodities across a 1.5°C pathway, aligned with the Paris Agreement, and four bottom-up energy transition scenarios. These energy transition scenarios examine outcomes ranging from warming of 1.6°C to 2.9°C by 2100 (scenario descriptions outlined below in sidebar “About the Global Energy Perspective 2023”). These wide-ranging scenarios sketch a range of outcomes based on varying underlying assumptions—for example, about the pace of technological progress and the level of policy enforcement. The scenarios are shaped by more than 400 drivers across sectors, technologies, policies, costs, and fuels, and serve as a fact base to inform decision-makers on the challenges to be overcome to enable the energy transition.

Growing global momentum could accelerate the energy transition, as demonstrated by the UAE Consensus, released in December 2023, that calls on Parties to make a just and orderly transition away from fossil fuels. Nevertheless, analysis from multiple sources, including the IEA, IPCC, and McKinsey, suggests that conventional fossil fuels are likely to remain a part of the energy mix to 2050, even in a 1.5° pathway, and may act as a bridge for an orderly transition. Therefore, decarbonizing the fossil fuel system and substantially reducing emissions, including methane, is a key area of focus. Within that evolving context, this article examines the potential road ahead for oil according to our sector-based adoption models. To view the natural gas outlook, please visit Global Energy Perspective 2023: Natural gas outlook.

The energy transition is expected to change the trajectory of global oil demand. According to our analysis, demand could fall by up to 50 percent by 2050, depending on the scenario modelled. However, even under the most accelerated scenario, the analysis shows that investment in a broad energy mix, including oil and gas, would continue for a period in order to shore-up security of supply and meet demand across the range of scenarios, particularly in end-use sectors such as chemicals, aviation, and heavy trucking. As a result, our bottom-up energy transition scenarios consistently see a certain amount of new field development continuing in order to meet overall energy demand, offset rapid production declines, and to meet transition energy shortfalls. Furthermore, our scenarios see investment in the oil and gas sector, both for fuel and non-fuel purposes, remaining robust through 2030 as the world navigates an orderly and affordable transition.

Growing energy efficiency and EV uptake could advance the timeline for oil demand decline

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