The global energy market has been hit by an 8% upward shock in long-term oil demand forecasts, according to BP’s latest annual outlook. The revision, which projects 83 million barrels per day (b/d) in 2050, is a strong signal that the clean energy transition is failing to meet the pace required for the 2050 net-zero target.
BP’s revised figures reflect a global slowdown in the clean energy transition. The long-term forecast for oil consumption has been raised from the prior 77 million b/d estimate. Natural gas demand is also forecast to remain resilient, projected at 4,806 billion cubic meters annually in 2050. Furthermore, BP has delayed the expected date of peak oil demand by five years, now projecting 103 million b/d in 2030.
This sustained high demand is being fueled by geopolitical instability. BP highlights that conflicts in the Middle East and Ukraine, coupled with rising trade tariffs, are intensifying the focus on national energy security. While this push might accelerate some countries towards low-carbon ‘electrostates,’ the report strongly warns of the counter-risk: an increased preference for domestically produced fossil fuels over imported alternatives.
The report underscores the severe consequences of this slow transition. BP calculates that the world is currently on a path that will breach the cumulative 2∘C carbon budget limit by the early 2040s. The company cautions that the longer the delay in fundamental decarbonization, the higher the economic and social cost will be for future mitigation efforts. To meet the 2050 net-zero goal, oil demand must plummet to approximately 35 million b/d by that date.
Despite the rapid expansion of renewables—set to meet over 80% of new electricity demand by 2035—oil will remain the largest single source of primary global energy supply, holding a 30% share in 2035. Renewables are set to rise from 10% to 15% of the primary energy mix by 2035, but are not expected to surpass oil’s market share until the late 2040s.