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Goldman Sachs Projects Oil Demand Growth Till 2034
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Goldman Sachs has raised its forecast for global oil demand, predicting robust growth until 2034. The investment bank now anticipates crude usage to peak at around 110 million barrels per day (bpd) by that year, largely due to slowing momentum in electric vehicle (EV) sales. This upward revision from the previously expected 106 million bpd by 2030 to 108.5 million bpd underscores the anticipated sustained consumption of oil products in the coming decade.
Drivers of Demand Growth
Goldman Sachs analysts attribute the prolonged oil demand growth primarily to economic expansion and industrial activities in emerging markets, particularly in Asia. China and India are projected to be the main drivers of this demand surge, echoing the consensus among other forecasters. Additionally, the bank points to a slower-than-expected transition to electric vehicles, citing rising concerns over EV capital costs, uncertain government policies, and a lack of charging infrastructure.
Peak Consumption Projections
The bank's analysts predict that global oil demand will plateau at around 110 million bpd in 2034, followed by a gradual decline at a CAGR of 0.3% until 2040. This long plateau phase suggests a sustained period of high refinery utilization. Notably, Goldman Sachs anticipates that oil products such as diesel and jet fuel will see a later demand peak (mid-2030s) but gasoline (the most widely used petroleum product) is expected to peak in 2028.
Comparison with Other Forecasts
Goldman Sachs' projections contrast with those of the International Energy Agency (IEA), which expects global oil demand to peak before 2030. The IEA recently reduced its 2024 demand forecast by 140,000 bpd, projecting a total demand increase of 1.1 million bpd for the year. On the other hand, OPEC remains more optimistic about long-term demand growth, aligning more closely with Goldman's bullish outlook on oil consumption.
Positive Outlook for Oil Prices
The prolonged period of oil demand growth predicted by Goldman Sachs — driven by slower EV adoption and strong economic activity in emerging markets — is likely to have a positive impact on oil prices in the coming decade. Continued high demand will keep refineries operating at elevated levels, potentially leading to tighter supply conditions and higher prices. Moreover, the anticipated lag in the peak of diesel and jet fuel demand further supports a robust pricing environment for these refined products.
3 Energy Stocks to Buy
Considering this optimistic picture, we recommend Oil/Energy investors to accumulate stocks like SM Energy Company (SM - Free Report) , Marathon Petroleum (MPC - Free Report) and ProPetro Holding (PUMP - Free Report) . SM Energy and Marathon Petroleum currently sport a Zacks Rank #1 (Strong Buy) each, while ProPetro carries a Zacks Rank #2 (Buy).
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. SM Energy has a trailing four-quarter earnings surprise of 13.8%, on average.
SM is valued at around $5.5 billion. SM Energy has seen its shares increase 77.6% in a year.
Marathon Petroleum: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 23.7%.
Marathon Petroleum is valued at around $62.6 billion. MPC has seen its stock rise 66.8% in a year.
ProPetro Holding: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 36.7%.
ProPetro Holding is valued at around $1.1 billion. PUMP has seen its stock rise 36.3% in a year.
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Goldman Sachs Projects Oil Demand Growth Till 2034
Goldman Sachs has raised its forecast for global oil demand, predicting robust growth until 2034. The investment bank now anticipates crude usage to peak at around 110 million barrels per day (bpd) by that year, largely due to slowing momentum in electric vehicle (EV) sales. This upward revision from the previously expected 106 million bpd by 2030 to 108.5 million bpd underscores the anticipated sustained consumption of oil products in the coming decade.
Drivers of Demand Growth
Goldman Sachs analysts attribute the prolonged oil demand growth primarily to economic expansion and industrial activities in emerging markets, particularly in Asia. China and India are projected to be the main drivers of this demand surge, echoing the consensus among other forecasters. Additionally, the bank points to a slower-than-expected transition to electric vehicles, citing rising concerns over EV capital costs, uncertain government policies, and a lack of charging infrastructure.
Peak Consumption Projections
The bank's analysts predict that global oil demand will plateau at around 110 million bpd in 2034, followed by a gradual decline at a CAGR of 0.3% until 2040. This long plateau phase suggests a sustained period of high refinery utilization. Notably, Goldman Sachs anticipates that oil products such as diesel and jet fuel will see a later demand peak (mid-2030s) but gasoline (the most widely used petroleum product) is expected to peak in 2028.
Comparison with Other Forecasts
Goldman Sachs' projections contrast with those of the International Energy Agency (IEA), which expects global oil demand to peak before 2030. The IEA recently reduced its 2024 demand forecast by 140,000 bpd, projecting a total demand increase of 1.1 million bpd for the year. On the other hand, OPEC remains more optimistic about long-term demand growth, aligning more closely with Goldman's bullish outlook on oil consumption.
Positive Outlook for Oil Prices
The prolonged period of oil demand growth predicted by Goldman Sachs — driven by slower EV adoption and strong economic activity in emerging markets — is likely to have a positive impact on oil prices in the coming decade. Continued high demand will keep refineries operating at elevated levels, potentially leading to tighter supply conditions and higher prices. Moreover, the anticipated lag in the peak of diesel and jet fuel demand further supports a robust pricing environment for these refined products.
3 Energy Stocks to Buy
Considering this optimistic picture, we recommend Oil/Energy investors to accumulate stocks like SM Energy Company (SM - Free Report) , Marathon Petroleum (MPC - Free Report) and ProPetro Holding (PUMP - Free Report) . SM Energy and Marathon Petroleum currently sport a Zacks Rank #1 (Strong Buy) each, while ProPetro carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
SM Energy Company: SM beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters. SM Energy has a trailing four-quarter earnings surprise of 13.8%, on average.
SM is valued at around $5.5 billion. SM Energy has seen its shares increase 77.6% in a year.
Marathon Petroleum: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 23.7%.
Marathon Petroleum is valued at around $62.6 billion. MPC has seen its stock rise 66.8% in a year.
ProPetro Holding: Over the past 60 days, the Zacks Consensus Estimate for 2024 earnings has moved up 36.7%.
ProPetro Holding is valued at around $1.1 billion. PUMP has seen its stock rise 36.3% in a year.