Goldman sees oil demand rising through 2040 driven by petchem, jet fuel growth

Goldman Sachs expects global oil demand to rise through 2040, driven by limited alternatives for jet fuel and petrochemicals, energy demand growth outpacing displacement by low-carbon technologies, and an indirect 3 million b/d boost from artificial intelligence through higher global GDP.

Global oil demand is forecast to grow from 103.5 million b/d in 2024 to 113 million b/d by 2040, the investment bank said in a new report, which expects annual average demand growth of 0.6 million b/d through 2040.

The report, published Nov. 13. comes days after the International Energy Agency said it sees global oil demand rising until 2050 under its current policies scenario, in a major departure from the base case presented in its previous annual World Energy Outlook.

Goldman said its demand projection reflects a shift in demand drivers as road transportation oil consumption is expected to peak around 2030, with petrochemicals becoming the primary growth engine thereafter.

"As road demand peaks, petrochemicals become the key driver of global oil demand growth, with petrochemical oil demand (naphtha, ethane, LPG) growing at an average annual pace of 0.5 mil b/d or 2.1%," the Goldman Sachs research report said.

Acknowledging its "above-consensus" view on long term oil demand, Goldman said it expects non-OECD countries to account for over 90% of petrochemical oil demand growth over the next 15 years. China and the Middle East are positioned to lead this expansion, the bank said, mirroring the concentration of petrochemical and plastics production facilities in the regions.

AI demand boost

Goldman said it expects road transportation oil demand to edge up 0.9 mil b/d to peak in 2030, followed by a gradual decline along a "long plateau" that sees consumption fall by just 1.7 mil b/d from peak levels by 2040. This reflects competing forces: a 58% rise in the global vehicle fleet offset by a 35% reduction in oil use per vehicle as electric vehicles reach 30% of the passenger fleet by 2040. The forecast incorporates Goldman's equity analysts' projections for electric vehicle sales, which are expected to account for nearly 70% of global passenger vehicle sales by 2040.

The back also said it expects artificial intelligence to provide an indirect boost to global oil demand through higher economic growth, projecting a 3 million b/d increase by 2040 in its base case scenario.

AI's impact on oil demand will be primarily indirect, working through enhanced global GDP growth rather than direct energy consumption, according to the report. In an upside scenario with full AI adoption, Goldman estimates the boost could reach 6 million b/d by 2040.

"This diminishing role of oil in power generation suggests that any AI-driven global power demand boom will not have a large direct effect on oil demand, in contrast to natural gas," the Goldman research states.

S&P Global Energy analysts projected that world liquids demand would peak at 108.5 million b/d in 2031 in a Q3 report. By 2050, Energy analysts expect consumption to slowly ease to 99.4 million b/d, under a base-case scenario.