Oil demand to remain at current levels until at least 2040, Vitol says

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Global demand for oil will not fall until at least 2040, according to a new forecast by the world’s largest independent energy trader, in the latest signal that economies will struggle to break their dependence on petroleum.

Vitol, which trades about 7 per cent of the world’s oil supply every day, expects global demand to peak at almost 110mn barrels per day at the end of this decade, and then retreat to current levels of about 105mn b/d in 2040.

“Demand in 2040 is expected to be on a par with today,” it said in its long-term demand outlook seen by the Financial Times and due to be released on Sunday. It is the first time the privately held trading company has published its internal calculations on energy demand.

The forecast sets Vitol apart from the International Energy Agency, which expects oil demand to peak at 105.6mn b/d in 2029. The prediction also differs from those made by BP.

The British major’s widely read energy outlook in July said oil demand would plateau at the end of this decade and then drop to about 91.4mn b/d in 2040. Even that was 6 per cent higher than its last forecast, indicating that BP also expects a slower energy transition than previously thought.

The spread between the different predictions reflects the challenges of forecasting long-term oil demand, particularly while the pace of adoption of new technologies such as electric vehicles and sustainable aviation fuel remains uncertain.

Vitol’s bullish outlook comes just weeks after the election of Donald Trump, with the US president committing to increasing the production of fossil fuels. The company said growing populations, economic growth and urbanisation would support oil demand despite efforts to cut carbon emissions by transitioning to cleaner fuels.

Consumption of some oil products, such as petrol, was expected to fall, Vitol said. It forecasts that global petrol demand will drop by 4.5mn b/d by 2040, with consumption already falling in China due to the mass rollout of electric cars.

However, such declines will be offset by increased demand for plastics made from petrochemicals and for liquefied petroleum gas (LPG) as a heating and cooking fuel in developing economies, according to Vitol’s analysis.

Oil demand from the petrochemicals industry was likely to rise by 6mn b/d by 2040 to represent a fifth of all oil consumed, it said. Meanwhile, LPG consumption is expected to increase by 1.7mn b/d over the period as more people in developing economies switch from more dangerous solid fuels, such as charcoal, to the bottled gas.

Among commodity traders, Vitol has been one of the most bullish about the long-term strength of oil demand, acquiring the largest single refinery in the Mediterranean last year.

So far that strategy has been successful and has made Vitol one of the most profitable companies in the world on a per employee basis. It made net profits of $15bn in 2022 and $13bn in 2023 as geopolitical disruptions roiled oil markets.

Vitol is owned by approximately 450 senior partners and employs about 1,700 people, mainly spread across trading hubs in London, Geneva, Singapore and Houston.