June 16, 2021

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Goldman Sees Oil Demand Peak in Transportation 5 Years Out

Add Goldman Sachs Group Inc. to the list of forecasters calling for oil demand to peak sooner rather than later.

The bank brought forward its forecast for peak oil demand in the transportation sector by one year to 2026, if not sooner, largely due to the accelerating adoption of electric vehicles. Overall crude consumption will keep expanding this decade due to jet fuel and petrochemicals, but growth will be at an “anemic” pace past 2025.

Goldman is the latest to reevaluate what the end of demand growth will look like for oil. Among the most aggressive calls is that from BP Plc, which said last year that the era of oil demand growth may already be over, while the International Energy Agency has taken a more conservative view than BP, seeing demand plateau from around 2030.

Most recently, Wood Mackenzie Ltd. warned of the “severe” risks for oil companies not preparing for an accelerated energy transition. If governments move aggressively to cut greenhouse emissions in line with the Paris Climate Accord, oil consumption would start to decline as early as 2023

“Government policies driving higher efficiency gains and lower emissions have had the strongest bearing on road transport demand,” Goldman analysts including Nikhil Bhandari and Damien Courvalin said in a report. “Petrochemicals will become the new baseload for oil demand, driven by economic growth and rising consumption, especially in emerging markets.”

See also: Woodmac Sees ‘Severe’ Impact for Oil & Gas in 2-Degree World