BAKU, Azerbaijan, June 23. Oil consumption will enter permanent decline in developed markets by 2025, Fitch Solutions told Trend.
In an era of accelerating energy transition, the global oil and gas sector is expected to confront mounting challenges, leading to industry consolidation.
The rising demand for energy efficiency and a shift towards alternative fuels will exert increasing pressure on oil and gas consumption worldwide. While initial demand reductions have primarily impacted easier-to-abate sectors like road transport and power, developed markets (DMs) have borne the brunt of these effects thus far. However, achieving the goals outlined in the Paris Agreement necessitates comprehensive decarbonization strategies across all sectors and global markets.
According to data analysis, oil consumption in DMs is projected to enter a permanent decline by 2025. In contrast, emerging markets (EMs) are likely to experience a delay of at least a decade in reaching their peak demand due to the challenges they face in transitioning their energy mix while coping with rapidly growing consumption.
Different regions will exhibit varying rates of decline, attributed to differences in energy composition, economic conditions, demographics, and policy perspectives. Over several decades, demand resilience will be most prominent in Africa, the Middle East, and Central and Eastern Europe. Conversely, Western Europe, North America, and developed Asia are expected to witness the most rapid declines in oil and gas consumption.
Furthermore, the trajectory of demand decline will differ across different fuel types. Road transport fuels will face the greatest vulnerability as fuel efficiency standards increase and electric vehicles (EVs) gain wider adoption. Aviation and marine fuels, though more challenging to replace, will also experience significant losses by 2050 as alternatives enter the market in the next decade. In contrast, the fuels serving the petrochemical and heavy industrial sectors are expected to have a more prolonged lifespan, as viable alternatives are currently less developed in these areas.
As the energy landscape undergoes transformation, the global oil and gas industry must grapple with the need for adaptation, consolidation, and exploration of alternative pathways.
Follow the author on Twitter: @Lyaman_Zeyn
