The photo is sourced from Zee Business
Ground transport remains the largest segment of the oil market. Rystad Energy estimates that cars and trucks will account for a total of 41.7% of global oil demand in 2024, while petrochemicals and air travel will represent 15.5% and 6.9%, respectively (with all other sectors totaling 35.9%). This is why oil market dynamics will be heavily influenced by the development of the electric vehicle sector, including in the passenger car segment, in which the share of electric cars and plug-in hybrids in the sales structure increased from 16% to 19% last year.
Rystad Energy predicts that the introduction of electric vehicles will continue to be hampered by the low coverage of charging infrastructure (especially in countries outside the OECD) and the risks of reduced profitability for electric car manufacturers due to, among other things, the high cost of metals for the cathodes of lithium-ion batteries (nickel, cobalt and lithium). In turn, trends in freight transport will be determined by both the low level of implementation of alternatives to internal combustion engines (including fuel-cell vehicles) and urbanisation in developing countries, including India, which is still far behind China in terms of the share of urban dwellers in the total population (36% versus 64% in 2022). Efforts to reduce this gap will stimulate not only cargo transportation, but also demand for petroleum products in the housing sector, which will account for 5.9% of global oil demand in 2024.
In the second half of the 2020s, the oil market will be dominated by petrochemistry, where petroleum products such as naphtha and liquefied petroleum gases (LPGs) serve as raw materials for the production of polymers, which are used in construction, automaking, the pipe and food industries and a number of other sectors. In the petrochemistry segment, the launch of new petrochemical production facilities will play a crucial role. Argus expects global polyethylene production capacity to grow by an average of 5.8 million tons per year and exceed 150 million tons per year by 2032. It will be driven by China, which will account for 43% of capacity growth.
An important but rarely discussed demand driver will be the shift away from biomass combustion for the purposes of cooking and towards the use of LPGs in sub-Saharan Africa, which will increase oil demand by 1.5 million barrels per day (about 1.5% of the current global demand). Along with the population boom in Africa, this will make an impact on the growth of global oil demand, which will persist until at least the end of the 2020s.
