Goldman Sachs released a research note on Monday predicting that global oil demand could reach its peak as soon as the year 2024. The report argues that increased production and sales of electric cars, slowing economic growth and increased fuel costs could significantly drive down demand across the globe.
The economic growth of developing countries may slow the peak until 2030 but oil demand growth will still be reduced over the next 10 years by greater fuel efficiency standards and and the growth of electric vehicles, Goldman Sachs said.
Goldman Sachs predicts the number of electric cars on the street globally in 2030 to grow by more than 40 time the number on the streets in 2016, from 2 million to over 83 million.
The annual growth of oil demand from 2017 to 2022 will average at 1.2% and slow to 0.7% by 2025 and 0.4% by 2030.
From now until 2030, transportation will add less to the growth in demand for oil, while the petrochemical industry will take the lead in contributing to new demand for oil.
Goldman Sachs believes there will be a glut of refined oil products over the next five years as a result of increasing production capacity and the slowing of demand, which should lead to lower margins.
“Refinery closures may occur in developed markets, with new capacity opening near demand centers (chiefly in Asia),” they said, quoted by Reuters.
The International Maritime Organisation’s 2020 sulfur limit is set to seriously impact the use of high sulphur fuel and the refining industry, said Goldman Sachs. If the International Maritime Organisation’s 2020 limits are fully implemented it will result in increased demand for diesel and widen the sweet-sour crude differential, they report.
Jet fuel is set to see its demand rise with the growth of aviation mainly in the developing world.