Outlook to 2040
Outlook to 2040
However, population expansion, economic growth and urbanisation continues to increase demand for transport, plastics, chemicals and energy, and hence oil. The availability of sustainable solutions and the cost of adopting these will determine how decarbonisation will transpire over the next 15 years.
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At its height – expected at the end of this decade – demand could reach almost 110 million bpd, and is likely to remain at this level until it begins to decline from the middle of the next decade. By 2040, it is anticipated to recede to current levels of around 105 million bpd.
It is likely to be a tale of two halves during which the profile of the barrel is expected to change. 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.
Oil fuels for road transport – principally gasoline and diesel – dominate demand at 45% of the barrel and the outlook for these fuels underpins the overall forecast. The adoption of EVs – primarily passenger cars and a portion of light commercial vehicles (LCVs) – represents the main decarbonisation solution at tailpipe and available at a scale that could moderate oil demand. Declining gasoil demand within the residential sector – as consumers adopt sustainable heating solutions – is also expected to contribute to falling consumption. By 2040, total gasoline and gasoil demand (in all categories) is anticipated to fall to represent less than half of the barrel.
The expected outlook for most of the remainder of the barrel is one of rising demand and no disruptive technologies that could reasonably reduce reliance on oil products at scale.
Rising populations, incomes and urbanisation is increasing demand globally for plastics, and in developing economies for fuels used in residential and small-scale commercial activities. It is anticipated that naphtha and LPG will consequently increase in relative importance over the outlook, to represent a quarter of the barrel by 2040 – up from a fifth today.
As people become wealthier and fly more, petroleum-derived jet fuel demand is expected to increase to represent 10% of the demand barrel by 2040, from 7% today. The adoption of sustainable aviation fuel (SAF) will likely increase over the forecast period as mandates come into effect, but is unlikely to be high enough to change a rising trend for petroleum-derived jet fuel demand.
The demand outlook is likely to be a tale of two halves; road transport fuels are in decline whilst other sectors continue to increase.
Shaded section indicates timing of COVID-19 pandemic
Structured by sector, each section sets out the outlook and highlights the influencing factors that could shape product demand and supply, as well as potential risks to these projections. We discuss the available technologies but highlight that decarbonisation solutions come with a cost and will require ancillary investments in technology, labour and infrastructure. Someone must bear this cost.
Some regions are better placed to achieve decarbonisation; the cost of transition and impact on economic activity may dictate the pace of change, particularly in developing economies, where underlying oil demand is rising.
Policy will also be crucial in shaping behaviour and business decisions. The cost – both monetary and non-monetary – will be determined by policies, incentives and subsidies to reduce oil consumption. These are expected to heavily influence the pace of transition and give rise to regional disparities.
Unless otherwise referenced, all numbers are Vitol’s own.
The Long term oil demand outlook report includes Vitol’s views on and forecasts of both historical levels and projections of future energy demand, supply, and trends based upon internal data and analyses as well as publicly available information from a variety of external sources. The report contains forward looking statements, including projections, targets, expectations, estimates and assumptions of future behaviours. Actual future conditions and results (including energy demand, energy supply, the growth of energy demand and supply, the impact of new technologies, the relative mix of energy across sources, economic sectors and geographic regions, imports and exports of energy, emissions and plans to reduce emissions) could differ materially due to changes in economic conditions, the ability to scale new technologies on a cost-effective basis, unexpected technological developments, the development of new supply sources, changes in law or government policy, political events, demographic changes, trade patterns, the development and enforcement of global, regional or national mandates, changes in consumer preferences, and various other factors. The report was published in February 2025. Vitol assumes no duty to update these statements or materials as of any future date, and neither future distribution of this material nor the continued availability of this material in archive form on our website should be deemed to constitute an update or re-affirmation of this material as of any future date. This material is not to be used or reproduced without the permission of Vitol. All rights reserved.