Bloomberg reports that Goldman Sachs Group Inc. brought forward its forecast for peak oil demand in the transportation sector by one year to 2026, if not sooner, largely due to the accelerating adoption of electric vehicles. Overall crude consumption will keep expanding this decade due to jet fuel and petrochemicals, but growth will be at an “anemic” pace past 2025.
Goldman is the latest to reevaluate what the end of demand growth will look like for oil.
“Government policies driving higher efficiency gains and lower emissions have had the strongest bearing on road transport demand,” Goldman analysts including Nikhil Bhandari and Damien Courvalin said in a report. “Petrochemicals will become the new baseload for oil demand, driven by economic growth and rising consumption, especially in emerging markets.”
Avoiding peak oil this decade largely comes as economic growth continues in emerging markets, while for developed markets, Goldman sees overall oil demand never returning to 2019 levels. The decrease in road transport demand, which accounts for 43% of overall oil consumption, is also being exacerbated by a shift toward permanent work-from-home behaviors in the wake of the pandemic, the report said.
Tightening emission targets in the U.S. and Europe are spurring the outlook for rising electric vehicle penetration, which if adopted at an even faster pace, could drive road transport demand to peak one year earlier than the bank’s base-case scenario. Meanwhile, significantly higher oil prices could also bring forward the peak for overall oil demand, the bank said.
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