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The writer is head of FIC and commodities research at Société Générale
In a world aiming to move beyond hydrocarbons, forecasting oil demand is increasingly complex and subject to debate. Just look at the different forecasts from the International Energy Agency and Opec, two bodies that ought to know where oil markets are heading.
For 2026, the IEA projects modest growth of 770,000 b/d, bringing demand close to 106mn b/d — about 10mn barrels a day higher than a decade ago. Opec is more optimistic, forecasting 1.3mn to 1.4mn b/d growth, while the US Energy Information Administration expects 1.1mn b/d. This gap is striking given the short one-year horizon. It highlights the challenges of predicting demand amid shifting policies, technology and sustainability efforts — making oil’s future dynamic and uncertain.
If a 12-month outlook is difficult, what about 25 years? Last month, the IEA released its long-term World Energy Outlook 2025, with scenarios ranging from resilient oil demand to steep structural declines. Adding forecasts from global energy companies and agencies reveals trajectories even more bullish and bearish than the IEA’s. The divergence is almost cinematic: futures confidently projected but unproven.
Still, many hope for a dramatic decline over 25 years. But is that realistic when global infrastructure remains built on hydrocarbons?
History reminds us how hard it is to abandon entrenched infrastructure used for centuries in search of alternatives. In the 1850s, before crude oil was discovered in 1859 in Titusville, Pennsylvania, whale oil dominated lighting and lubrication. Sperm whale oil, considered then clean-burning and stable, was used for lubrication in things like watches, clocks and firearms. Oil from humpback, blue, fin, bowhead and right whales was lower quality and used cheaply for lighting, among other uses. Although the US whaling fleet was dominant, the US still imported significant amounts of whale oil from other nations such as the UK and France.
The US heavily relied on whale oil, but imports declined over decades as domestic crude oil production grew. By the 20th century, whale oil imports were minimal, mainly for ceremonial or speciality uses. What lesson can we draw today from its decline?
Lesson one is falling demand for one energy source during a transition doesn’t mean that demand collapses immediately. Whale oil imports fell before the crude oil discovery in 1859, but it took about 50 years for imports to drop to negligible levels. The US still imported whale oil worth 5 per cent of 1859 levels 50 years later. Simply put, shifting energy systems takes a long time.
Lesson two is that declining demand growth in an energy industry doesn’t mean prices and volatility fall. As the industry shrinks, investment in supply declines due to uncertainty, causing price rises and volatility for consumers still dependent on the commodity. For whale oil, imports began falling in the 1850s, but prices remained volatile and only normalised after 50 years.
Since 1859, much infrastructure has been built on hydrocarbons, shaping energy, transport and economies. Though technological innovation is faster today, switching to alternatives such as solar or nuclear at scale won’t happen overnight — or even within 25 years — to significantly alter the energy mix. Moving away from hydrocarbons soon is unlikely, especially as emerging economies remain fossil fuel dependent. Given this uncertainty, can we at least estimate future oil demand?
Forecasting oil demand by population is imperfect but insightful. Historically, global oil demand growth has tracked population growth, as more people increase energy use for transport, heating, electricity, industry and economic activity. Using UN population projections, oil demand could reach 108.6mn b/d by 2030, 116mn b/d by 2040, and 122mn b/d by 2050, up from about 105mn b/d today. However, climate policies mean this simple model alone is insufficient.
The IEA’s World Energy Outlook offers two potential outcomes: first, a “current policies scenario”, reflecting existing policies, forecasts demand rising to 113mn b/d by 2050; second, a “stated policies scenario”, including broader policies, predicts demand peaking in 2030 then declining to 97mn b/d by 2050.
These represent very different futures for oil. US and European energy companies also have differing views on future demand. Overall, forecasts range from 88mn to 113mn b/d. In my opinion, terminal oil demand will probably be closer to 115mn b/d by 2050. Of course, all this remains educated guesswork. With such uncertainty and divergent views, adaptive thinking is essential for energy demand outlooks.
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