Goldman Revises Oil Demand Forecast After IEA U-Turn

Goldman Sachs commodity analysts have followed suit with the International Energy Agency, revising their predictions for oil demand much higher.

By 2040, oil demand could expand to 113 million barrels daily, the analysts wrote in a note, as cited by Bloomberg. That would compare to 103.5 million barrels in 2024. It would also compare to a previous Goldman prediction of oil demand peaking in 2034.

The revision follows the International Energy Agency’s latest World Energy Outlook, in which the IEA admitted oil and gas demand could continue growing until 2050 regardless of the net-zero push. As demand for energy grows, so will demand for the traditional sources of that energy, the agency said. In a departure from its predictions of peak oil demand and peak natural gas demand before 2030, the IEA now expects oil demand to reach 113 million barrels by 2050.

Goldman Sachs motivated its own revision with the slower-than-expected progress of net-zero policies, including infrastructure obstacles to the expansion in wind and solar generation capacity, as well as a slower-than-expected adoption of electric vehicles.

“We do not assume major breakthroughs in low-carbon technology,” the bank’s analysts wrote in their note. “Even for peaking road oil demand, we expect a long plateau after 2030,” they added, noting that freight transport fueled by liquefied natural gas was unlikely to catch out outside China, where it has replaced some petroleum fuel demand.

The team allowed for the possibility that this could change over the longer term, with low-carbon technology adoption accelerating at some point. However, this would depend on government priorities, which currently seem to have returned from emission reduction to energy security, as acknowledged by the International Energy Agency in its outlook under the weight of evidence that low-carbon sources of electricity cannot meet the growth in overall energy demand.

By Irina Slav for Oilprice.com

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