McKinsey Anticipates Oil Demand Could Peak By 2025

The conflict in Ukraine has spotlighted the unprecedented uncertainties by the global energy markets are facing. 

“In the past few years, we have certainly seen the energy transition pick up pace. Every year we’ve published this report, peak oil demand has moved closer. Under our middle scenario assumptions, oil demand could even peak in the next three to five years, primarily driven by electric-vehicle adoption,” said Christer Tryggestad, a senior partner at McKinsey.

This year’s Global Energy Perspective study by McKinsey indicated that the long-term transition to low-carbon energy systems continues to see strong momentum and, in several respects, acceleration.

Leading up to COP26, a total of 64 countries, covering more than 89 percent of global emissions, have pledged or legislated achieving net zero in the coming decades.

To keep up with these net-zero ambitions, the global energy system may need to significantly accelerate its transformation.

However, even with current government commitments and forecasted technology trends, global warming is projected to exceed 1.7°C by 2100, and therefore reaching a 1.5°C pathway is increasingly challenging.

The report projects a rapid shift in the global energy mix, with the share of renewables in global power generation expected to double in the next 15 years while total fossil fuel demand is projected to peak before 2030, depending on the scenario.