Global oil demand is expected to stay near the same level over the next 15 years, with declining demand by the middle of the next decade offsetting anticipated gains over the next few years, finds a long-term outlook by the global energy trader and distributor Vitol.

“Demand in 2040 is expected to be on par with today,” Vitol says.

In the United States, Vitol predicts that gasoline demand will remain flat over the next few years. However, by the end of the decade, consumption is forecast to begin declining, falling to 6.3 million barrels per day by 2040. Europe is on a similar path, with demand expected to stay around 2 million bbl/d until 2030, then fall as low as 1.6 million bbl/d by 2040, Vitol says. China’s quick progress on electric vehicle adoption means gasoline demand has likely peaked in the country already, Vitol reasons, and could fall as low as 2.3 million bpd by 2040.

“These regions are largely anticipated to remain market leaders in the adoption of EVs, assuming policy implementation remains supportive; and will provide a blueprint (of both successes and learnings) as the rest of the world electrifies its road transport,” Vitol says.

Oil Demand Drivers

Several factors will continue to spur oil demand over the next 15 years despite efforts by climate change organizations to slow the industry, Vitol says, including population expansion, economic growth, and urbanization, as well as demand for fuels that developing countries use in residential and small-scale commercial activities.

Road transport fuels such as gasoline and diesel will lose dominance, Vitol forecasts, while demand will grow for petroleum products used in plastics production, residential fuel, and aviation. “It is likely to be a tale of two halves during which the profile of the barrel is expected to change,” the commodities trader argues.

In 2025, road transport fuels will make up roughly 45% of the barrel, Vitol says, but continued adoption of electric vehicles will continue to chip away at their share. “Declining gasoil demand within the residential sector–as consumers adopt sustainable heating solutions–is also expected to contribute to falling consumption,” Vitol adds.

“Key to this shift is the increasing availability of EVs which, for the first time, may support the expansion of road transport mobility, without a corresponding rise in the demand for petroleum fuels,” Vitol continues.

Vitol projects gasoline demand in the United States, the European Union and China will fall roughly 5 million bbl/d lower than current levels by 2040 but will still account for about 44% of global consumption. Vitol predicts the United States will remain the single biggest market for gasoline.

“This highlights the challenge in reducing the proportion of internal combustion engine vehicles in global fleets,” Vitol says. “By 2040, the total global car fleet is expected to increase by 550 million units to around 2 billion, with EVs and (plug-in hybrid electric vehicles) still only likely to represent at most 38% of this figure despite rising global sales.”

By 2040, worldwide gasoline and gasoil demand will fall below half the barrel, Vitol projects, while demand for petroleum-derived jet fuel will rise to represent 10% of the barrel, up from 7% today. “The adoption of sustainable aviation fuel (SAF) will likely increase over the forecast period as mandates come into effect, but is unlikely to be high enough to change a rising trend for petroleum-derived jet fuel demand,” Vitol assesses.

Global oil demand is expected to peak at the end of this decade, reaching almost 110 million bpd, Vitol says, and is expected to stay at that level until the middle of the 2030s until receding back to current levels (around 105 million bpd) by 2040.

Vitol also expects naphtha and LPG to increase in importance over the next 15 years. The two products account for about 20% of oil demand currently, Vitol says, and will constitute a quarter of total oil demand by 2040.

You can read Vitol’s full long-term oil demand outlook, which includes more details on the company’s forecasts for transportation, aviation, petrochemical and residential demand, at vitoloutlook.com.