Goldman Sachs sees peak road transport oil demand by 2026, cites EVs

London (Quantum Commodity Intelligence) Investment bank Goldman Sachs has brought forward its forecast for peak oil consumption in the road transport sector by one year to 2026, citing progress in electric vehicles, according to a report seen by Bloomberg.  

"Government policies driving higher efficiency gains and lower emissions have had the strongest bearing on road transport demand," Goldman analysts including Nikhil Bhandari and Damien Courvalin wrote, according to the report.

The decrease in road transport demand, which accounts for 43% of overall oil consumption, is also being exacerbated by a shift toward permanent work-from-home behaviors in the wake of the pandemic.

However, demand growth for oil will continue due into the second half of the decade, although growth will be at an "anemic" pace past 2025.

"Petrochemicals will become the new baseload for oil demand, driven by economic growth and rising consumption, especially in emerging markets," Bloomberg cited the report as saying.

The report also said tightening emission targets in the U.S. and Europe are accelerating rising electric vehicle penetration, which if adopted at an even faster pace, could drive road transport demand to peak one year earlier than the bank's base-case scenario.

Meanwhile, significantly higher oil prices could also bring forward the peak for overall oil demand, the bank said.

Earlier this week research firm Wood Mackenzie said increased focus on climate action policies, adoption of rapid electrification in transport and decarbonisation of the power sector could see global oil demand peaking as early as 2023.

In 2020 BP said that global oil demand will not regain the levels seen last year.

It noted that demand could soon fall rapidly in the face of stronger climate action – by at least 10% this decade and by as much as 50% over the next 20 years.

Norway's Equinor said last year it expects global oil demand to peak by around 2027-2028. Equinor sees oil demand returning to the pre-pandemic level of around 100 million bpd by around 2025, but falling to 88 million bpd in 2050.