Global Oil Demand Reaches New Heights despite Rise in Electric Vehicle Sales
A report by Morgan Stanley has revealed that global oil consumption is expected to increase by nearly 40 percent this year, defying conventional expectations despite the growing adoption of battery electric vehicles (BEVs). Norway, with 80 percent EV penetration, serves as a compelling case study, as the country’s oil consumption has not collapsed.
China, the largest EV market, has seen a 50 percent surge in oil demand while EV penetration has exceeded 20 percent, highlighting the overlooked fact that road transport accounts for less than half of global oil consumption. The International Energy Agency (IEA) projects petrochemicals and jet fuel to be significant contributors to future oil demand, while historical trends show that new technologies take time to dominate the market.
Despite previous predictions of a decline, global oil demand is expected to hit record levels by the end of the year, driven by stronger-than-expected global GDP growth and improved jet fuel demand. However, major oil producers, including OPEC and Russia, have cautiously responded to the increased demand, and underinvestment in oil production remains a concern.
The industry shift toward a more investor-friendly capital allocation approach and substantial potential gains suggest a compelling outlook for energy equities amid a period of “tighter for longer” oil market conditions. While the energy transition is underway, a rapid decline in oil demand appears distant, as current investment levels fall short of meeting potential oil demand growth.
The report challenges popular beliefs about the future of oil demand and provides a critical analysis of various factors driving global oil consumption. For more information on current events and important updates, check out the related articles below:
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