The International Energy Agency (IEA) has called peak oil as happening in 2029, something that has got tanker analysts discussing what this means for owners mulling rejuvenating their fleets.

The IEA’s latest report, Oil 2024, suggests global demand for oil will peak in 2029 and start its decline thereafter.

The IEA forecasts global oil demand will peak in 2029 at 105.6m barrels per day, up a modest 2.4m barrels per day from this years’ estimate of 103.2m barrels per day, Over five years, this represents what analysts at brokers Poten & Partners described as “anaemic” annual average growth of 500,000 barrels per day.
The bulk of this demand growth, as expected will come from India and China, and other emerging Asian nations.

The key drivers behind the decline in oil demand are the shift towards electric vehicles and the substitution of oil with gas or renewables in the power sector. According to the IEA, the growing penetration of electric vehicles will displace 6m barrels per day of gasoline and diesel demand by 2030.

For crude oil tankers, Poten suggested the long-term outlook is mixed. Moving more oil from the Atlantic to the Pacific will help ton-mile demand, as will the continuation of the Western sanctions against Russian crude exports, which means they will be most exported to Asia, Poten argued in its latest weekly report.
“If the IEA predictions come to fruition, crude tankers that are being ordered now should be seen as replacement tonnage rather than growth capacity,” Poten maintained.

Analysts at rival broker Gibson pointed out that although peak demand is in sight, the overall volume of cargo that will need to be shipped is still large.

“This combined with an ageing fleet, stricter environmental regulations and a large pool of vessels engaged in sanctioned trades mean that the global crude market is likely to remain healthy past 2030,” Gibson predicted, adding that rising Atlantic crude supply combined a growing structural crude supply deficit in Asia will see higher west/east crude flows which should result in a continued expansion in crude tonne miles into the next decade.

For the product tanker market, Gibson said the outlook may be more challenging as road fuel demand eases by the end of the decade and more demand is centered in the east, closer to the anticipated domestically orientated refining capacity.

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