Oil demand could reach its peak in the next two to five years, McKinsey & Company’s Global Energy Perspective 2022 stated on Friday. The primary driver for the reduction in growth was likely to be a slowdown in growth in demand for road transport, the report added. Oil has been growing by 1 to 2 million barrels per day (bpd), with half of it driven by demand from road transport. 

The pandemic had slowed down growth too, but it gradually picked up. The report, however, has projected that the trend is likely to change from 2024 onwards. 

The reduction in oil demand for road transport is the uptake of electric vehicles (EV). The report added that global EV sales saw an uptick of 62 per cent per annum on an average in the last four years. In 2021 alone, this growth was marked at 96 per cent. In absolute terms, EV sales increased to 6.6 million in 2021 from 2.3 million in 2019. 

Europe was the leader in EV sales as it accounted for 20 per cent of the total car sales. US EV sales accounted for 5 per cent but doubled year on year. 

The demand in 2050 could be 35-50 per cent lower than the current levels. Liquids demand in road transport is expected to decline by 75 per cent by 2050, following the peak in the early 2020s. This decline will be driven by slow growth of cars on the road, increased efficiency and a higher volume of EVs. However, aviation liquids will continue to grow but the increased adoption of bio- and synfuels will cut demand for fossil kerosene, notes the report.