Global oil demand will peak around 2040 – or “much sooner” – the International Monetary Fund (IMF) said Thursday in a new report on oil’s future, Kallanish Energy reports.
The IMF said this could have a “significant” impact on oil-exporting countries, predominantly those in the Middle East whose existing financial wealth could be depleted in the next 15 years if major reforms aren’t undertaken.
“Growth of global oil demand will significantly decelerate, and its level could peak in the next two decades,” the IMF said in the report The Future of Oil and Fiscal Sustainability in the GCC Region.
The IMF said analysis of past oil market developments revealed “a strong and sustained declining trend in the global oil demand, after accounting for income and population growth,” CNBC reported.
This reflected numerous factors, according to the IMF, such as long-term improvement in energy efficiency and substitution away from oil, trends that had so far been “veiled by the effects of economic and population expansion.”
“But it is poised to become more visible in the coming years, resulting in a path of gradually slowing — and eventually declining — global demand for oil. The latter would peak by around 2040 in our benchmark projection or much sooner in scenarios of stronger regulatory push for environmental protection and faster improvements in energy efficiency.”
Growth of global demand for natural gas is also expected to slow, the Fund said, “although it is expected to remain positive in the coming decades.”
Anticipating and preparing for what comes next will be critical for oil-exporting regions, including countries of the Gulf Cooperation Council (GCC) home to the largest concentration of oil exporters, collectively producing over 20% of the global oil supply.
“Although the importance of non-oil sectors has increased in recent decades, many of them rely on oil-based demand either in the form of public spending of oil revenue or private expenditure of oil-derived wealth,” the IMF said.
The IMF said slowing global demand for oil spells a “significant fiscal sustainability challenge for the GCC region.”
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