Oil markets are entering a new “normal” phase. Demand growth is cooling from the post-Covid surge and will be shaped by global economic growth, inflation, interest rates, China and a gradual but profound structural shift in the transportation fleet. While demand growth is cooling, non-OPEC supply growth is rising sharply, leading OPEC+ to reduce output to rebalance the market. At the same time, the war in Ukraine and outbreak of conflict in the Middle East has injected significant geopolitical risk into the market. How will these new oil fundamentals develop over the next two years?
Few topics polarize oil markets as much as the trajectory of oil demand and the timing of an eventual “peak.” There are a broad array of scenarios and outlooks, painting very different pictures of when and how high global demand will peak. But one common thread remains throughout, liquids demand will remain a core component of the global energy mix for decades to come. What are the key factors that will shape the long-term demand profile and how will the industry position itself to meet demand for decades to come?