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BP raises oil and gas demand forecasts

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2024-07-11

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BP has increased its forecasts for oil and gas demand, signaling a slowdown in the transition to clean energy. In its annual outlook, the oil major highlighted that renewable power sources like wind and solar are not expanding quickly enough to meet the growing global energy demand.

BP cautioned that delaying the transition to clean energy could be “costly” and stated that oil would continue to “play a significant role in the global energy system for the next 10-15 years.”

The report projected oil demand to be about 97.8 million barrels per day (b/d) by 2035 under BP’s scenario reflecting the current global energy system trajectory. This is more than a 5 percent increase compared to last year’s projection, where BP had reduced its growth forecasts for both oil and gas.

When accounting for net-zero targets, which aim to reduce CO emissions by approximately 95 percent from current levels, the oil demand projection is 80.2 million b/d by 2035, a 10 percent increase from last year’s forecast.

The outlook indicated that oil demand would be 76.8 million b/d by 2050 under the current trajectory, compared to last year’s figure of 73 million b/d. Currently, the world consumes about 100 million b/d of oil.

BP’s forecast for natural gas demand in 2035 under the current trajectory is 3 percent higher compared to last year. The projection for oil demand in 2030 was last raised in 2022, while the projection for gas was last increased in 2018.

Despite the higher projected demand for fossil fuels, BP’s forecasts for CO emissions are lower by 2050 under both the current trajectory and when net-zero targets are considered.

The company emphasized that these predictions are not certainties but rather explore “the possible implications of different judgments and assumptions concerning the nature of the energy transition.”

The report did not provide a direct reason for the increase in oil and gas demand forecasts but noted that under the current trajectory, the decline in oil use for road transport is offset by rising oil use in the petrochemicals industry. Additionally, in emerging economies, “increasing levels of prosperity and rising living standards” support a more resilient demand for oil.

Spencer Dale, BP’s chief economist, stated that the world is in an “energy addition phase” where both low-carbon energy sources, like renewables, and fossil fuels are increasing in consumption. The challenge, he said, is to transition to a phase where “low-carbon energy increases sufficiently quickly to more than match the increase in global energy demand, allowing the consumption of fossil fuels and carbon emissions to decline.”

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