BAKU, Azerbaijan, March 12. The oil market is set for significant structural shifts in the long term, driven by evolving demand and supply factors, Trend reports citing the Gas Exporting Countries Forum (GECF).
On the demand side, while overall growth is expected to slow, the petrochemical industry will emerge as a key driver of oil consumption. GECF highlights that demand for petrochemical feedstocks will remain strong, fueled by the increasing need for plastics, fertilizers, and chemicals in developing and emerging economies. Unlike sectors such as transportation, where electrification and efficiency gains are reducing oil reliance, petrochemicals are less affected by energy transition policies.
"Developing economies will dominate long-term demand growth due to industrialization, urbanization, and rising living standards, highlighting the importance of these markets in sustaining future oil consumption," GECF stated.
On the supply side, the industry faces growing challenges in maintaining production levels. Declining output from existing oil fields will require substantial investments in new capacity to counteract depletion. High-cost unconventional projects, such as U.S. shale operations and yet-to-find reserves, will become increasingly critical, despite their higher marginal production costs.
GECF also warns that inflationary pressures on essential materials like steel and copper—driven by competition with renewable energy projects—will further escalate production expenses. Additionally, carbon pricing policies and stricter environmental regulations in major economies are expected to compound the financial burden on oil producers.
These long-term trends underscore the complexities facing the oil sector as it navigates a shifting global energy landscape.