The swit♏ch to alternative energy sources could lead to oil demand peaking before the end of this decade, with growth slowing to almost a halt in the coming years.

That’s according to the International Energy Agency (IEA), which said in its 2023 oil report that global oil demand is projected to increase by 6% between 2022 and 2028, reaching 105.7 million barrels per day (mb/d), boosted by the petrochemical and aviation sectors. However, it said that annual demand growth will drop from 2.4 mb/d this year to 0.4 mb/d five years from now, putting the peak “in sight.”

IEA Executiv𝔍e Director Fatih Birol said the “shift to a clean energy economy is picking up pace.” He warned oil companies to “pay careful attention” to the trend and “calibrate their investment decisions to ensure an🍎 orderly transition.”

The group noted that global oil markets are “slowly recalibrating after three turbulent years” because of COVID-19 and the war in Ukraine. It warned that the markets could tighten significantly in the coming months as OPEC+ production cuts limit gains in supplies. Still, the report indicated those strains are set to ease in the👍 following years. 

The IEA explained that because China was the last major economy to lift pandemic restrictions, it had a boom in demand early this year as businesses ramped up, although that should slow markedly from next year on. The IEA pointed out that soaring demand and strong consumption growth in emerging and developing economies “will more than offset a contraction in advanced economies.”