World oil demand will grow by around 12 percent by 2040 up to 104.9 million barrels per day, which is 1.4 million barrels above last year’s forecast, the International Energy Agency (IEA) said in its latest annual World Energy Outlook report.
MOSCOW (Sputnik) — In 2025, global oil demand is expected to increase by 7 percent and reach 100.3 million barrels per day, which is 2.1 barrels more than forecast last year.
“The long-term decrease in oil demand in advanced economies is more than offset by … growth in developing economies in the Asia Pacific region. India alone provides nearly half of this growth, more than doubling oil consumption between 2016 and 2040,” the report reads.
China will also remain an important driver of growth. In addition, Africa and the Middle East will also become sources of growth in oil demand, according to the IEA.
In the long term, the major demand for oil will be provided by such sectors as the freight transport, aviation and petrochemical industries, which are areas where there are little alternatives to the use of fuel.
As for the oil price, the IEA has cut its forecast by 18 percent to $83 per barrel by 2025, and by 11 percent to $111 per barrel by 2040, the agency’s World Energy Outlook 2017 showed on Tuesday.
The changes in the forecast are related to three main factors, the agency explained.
Firstly, such changes concern “substantial upward revision in the resource estimate for technically recoverable tight oil and natural gas liquids in the United States, up from 80 billion barrels to 105 billion barrels of crude and condensate.”
Secondly, a reduction in the cost outlook for a variety of upstream projects is behind the changes, meaning that more oil can be brought to the market at lower prices than in the past, the report said.
Finally, a greater share of shorter cycle investments on the supply side will make it easier for supply “to follow demand quickly and therefore for price to get closer to the cost of the marginal barrel,” the IEA explained.