Vitol Bullish on Long-Term Oil Demand

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Though decarbonization trends will continue, the global demand for oil isn't expected to decline until at least 2040, commodity trader Vitol (Geneva, Switzerland) said.

"Ambition globally to limit climate change is driving efforts to reduce oil consumption and lower CO2 emissions," Vitol said in a demand outlook to 2040. "However, population expansion, economic growth and urbanization continues to increase demand for transport, plastics, chemicals and energy, and hence oil."

Short on indicators like global gross domestic product (GDP), Vitol nevertheless said it expected global oil demand to reach a high of 110 million barrels per day (BBL/d) on average by the end of the 2020s and stay there until the mid-2030s. After that, by 2040, global oil demand is expected to contract to current levels of about 105 million BBL/d, Vitol said.

Penned before the onset of a potential global trade war following North American tariff disputes, economists at the Organization of the Petroleum Exporting Countries (OPEC) said they expected the global economy to expand annually by a healthy 3.1% this year, rising slightly to a 3.2% expansion next year.

"The services sector is expected to remain the main driver of growth, supported by a gradual rebound in industrial production," OPEC economists wrote in their January market report.

Among the major economies, China, the second largest behind the U.S., expands at 4.7% for 2025, though a slowdown to 4.6% is expected by next year. The U.S. expands by 2.4% in 2025, falling to 2.3% next year. The Eurozone slugs along at only 1% this year, but the bloc's economy is expected to grow incrementally by 1.1% in 2026.

Vitol is slightly more bullish than analysts at energy giant BP plc (NYSE:BP) (London, England), who in July put global oil demand at about 9.1 million BBL/d by 2040, some 13% lower than Vitol's estimate.

The Swiss commodities trader, however, is on par with its peers in the expectation that China, the European Union and the U.S. represent most of the global demand. On consumer fuels, Vitol said it doesn't expect much fluctuation, however, in the appetite for gasoline.

Gasoline demand could be influenced by the adoption of electric vehicles (EVs), which Vitol said were the main pathway to curbing emissions from the transportation sector. If EV sales stall, it could mean global crude oil demand could be as much as 4 million BBL/d higher in 2040 than the base estimate.

"These latest sales trends suggest that mainstream consumers, less concerned with environmental credentials, will be less willing to bear the cost of transition; not just financial, but of convenience and driving experience," Vitol said.

EVs may already be falling out of favor due to sticker shock and range anxiety. Both Ford Motor Company (NYSE:F) (Dearborn, Michigan) and Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) scaled back their EV programs last year.

"The dominance of road transport fuels is anticipated to decline, whilst demand growth is expected to be driven by petroleum products used in the production of plastics and fuel for residential activities and aviation," Vitol added.

Vitol trades about 7% of the global oil supply daily. Published Monday, the long-term outlook is the first for the Swiss trading giant.

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