Global oil demand is projected to peak at 108 million barrels per day in 2032, according to a recent report by the consultancy firm Wood Mackenzie. This forecast arrives two years later than previously anticipated, largely due to the sustained demand for hydrocarbons in transportation and petrochemical industries.
The Energy Transition Outlook report highlights that the increasing reliance on fossil fuels, driven by heightened power needs from advancements in artificial intelligence and ongoing geopolitical tensions, has rendered the goal of achieving net-zero emissions by 2050 increasingly elusive. As nations prepare for the upcoming COP30 meeting in Brazil, where countries will unveil updated climate commitments and review progress towards renewable energy objectives, the findings from Wood Mackenzie underline significant challenges in the energy transition.
Trends in Global Oil Demand
China’s oil consumption is forecasted to reach 16 million barrels per day by 2025. However, the adoption of electric vehicles is projected to reduce this demand by 35 percent by 2060. In contrast, countries like India, Southeast Asia, and Africa are expected to drive growth in oil consumption, highlighting a complex global landscape where demand shifts are influenced by regional factors.
The report also indicates that maintaining global warming within 2 degrees Celsius will necessitate an annual investment of $4.3 trillion from 2025 to 2060, representing a 30 percent increase from current investment levels. This investment surge is critical for aligning energy sector spending with the goal of net-zero emissions by around 2060. Currently, energy sector investments account for 2.5 percent of the global Gross Domestic Product (GDP), a figure that needs to rise to 3.35 percent within the next decade.
According to the Wood Mackenzie report, “Fossil fuels are no longer uncontested; they are being squeezed into narrower roles, but their decline is proving more gradual than expected.” The transition to renewable energy is a central component of efforts to meet the Paris Agreement targets, which aim to limit global temperature increases to 1.5 degrees Celsius above pre-industrial levels. However, the slower-than-expected pace of this transition, coupled with stronger crude oil demand, complicates the shift towards more sustainable energy sources.
OPEC+ Adjusts Production Strategy
In a related development, OPEC+ announced a modest increase in oil output targets for December, while also opting to pause any further increases in the first quarter of next year. This decision comes as the producers’ group reacts to rising concerns about a potential supply glut. Since April, OPEC+ has raised output targets by approximately 2.9 million barrels per day, representing around 2.7 percent of the global supply.
The group, which includes key members such as Saudi Arabia, Russia, and the United Arab Emirates, agreed to increase December output targets by 137,000 barrels per day, a figure consistent with increases seen in October and November. The decision to pause production increases from January to March 2026 reflects an effort to proactively manage the market during a season typically characterized by lower demand.
Oil prices have fluctuated significantly, dropping to a five-month low of approximately $60 per barrel on October 20, 2023, due to concerns regarding a building supply glut. However, prices have rebounded to around $65 per barrel, driven by new sanctions imposed on Russian oil producers and optimism surrounding negotiations between the United States and its trade partners.
Amid these dynamics, Amrita Sen from Energy Aspects noted that the pause in production increases demonstrates OPEC+’s commitment to managing market stability. The group had previously been cutting output for several years, with total reductions peaking at 5.85 million barrels per day in March, comprised of voluntary cuts and commitments from member nations.
The next OPEC+ meeting is scheduled for November 30, coinciding with a full meeting of the OPEC+ group, as the international community closely monitors developments in the oil market.
