Road fuels are hit hard, but impact of electrification is not apparent until 2030s
Road fuels – gasoline and diesel – have been the most important driver of oil demand historically, and the future trajectory for road fuel consumption shapes the overall outlook for oil demand. By far the biggest driver of the change in road fuel demand over the coming decades is the uptake of electric passenger vehicles (EVs), which grow to represent 28% of all car sales globally by 2030, and 73% by 2050. By 2050, 54% of the global passenger car fleet is electric. Demand for road fuels will continue to increase for another decade, with peak gasoline demand in 2030, and peak road diesel demand in 2033. EVs and other alternative drive trains subsequently erode 19 million barrels per day (m b/d) of demand by 2050, but the rate of displacement begins to fade in the 2040s as the increase in EV penetration slows as saturation points begin to be reached in major markets.
Road fuel demand outlook Year-on-year growth in road fuel demand
Increases in vehicle efficiency shape the near-term demand trend, with year-on-year growth slowing to below 1% by 2028, before peaking in 2031. As the uptake of EVs accelerates, road fuel demand falls, declining by over 1.2m b/d each year by 2040. Gasoline is hit much harder than road diesel, accounting for around two-thirds of the overall decline in demand to 2050.
Road fuels currently account for almost half of refinery output, with gasoline and road diesel being key drivers of downstream margins and profitability. As demand for road fuels shrinks, so will the relative share of gasoline and road diesel in the ‘refined product slate’, with production yields falling to 12% and 16% of the barrel respectively. Conversely, as demand for jet fuel and chemical feedstocks climbs, their combined share of the product slate grows to 32% by 2050, up from only 14% today. This shift will require a significant reconfiguration of the global refining system, and will favor integrated processors in low-cost regions over less-flexible higher-cost producers.
Demand outlook by product and implied refined product slate to 2050
Aviation and chemical feedstocks become the only segments to grow post-2035
As road fuel demand peaks and declines, aviation fuels and petrochemical feedstocks become the focal point for long-term growth in oil demand. Continued growth in passenger air travel, and the absence of economically viable and scalable low-carbon aviation fuels, causes jet fuel demand to increase by an average 2.1% per year out to 2050. Similarly, demand for plastics and petrochemicals is expected to significantly increase. We see demand for naphtha and propane increasing by 1.7% per year out to 2050, but for consumption to peak in the late 2040s as circular economy trends eat into demand for primary petrochemical feedstocks.
End-use sector oil demand outlooks
