World Energy Outlook 2018 examines future patterns of a changing global energy system at a time of increasing uncertainties and finds that major transformations are underway for the global energy sector. Across all regions and fuels, policy choices made by governments will determine the shape of the energy system of the future.

After the fallout from the 2014 oil price crash, the continued expansion of tight oil production in the United States and the prospect of major structural changes in oil consumption underpinned a view that the oil price was set to stay low for a very long time.

The reality has been different. On the supply side, while tight oil has proved remarkably resilient, geopolitical events, the slump in Venezuelan output, and decisions by major exporters have also weighed on production prospects. Meanwhile, on the demand side, lower prices have pushed up oil consumption. The oil price rose above $80/barrel in September 2018 for the first time since 2014, although it has come down since.

Where do we go from here? The forces of change in oil markets remain strong. A maturing shale sector is now poised to become profitable; the cost of new upstream projects has come down; and sales of electric cars continue to break records. But elements of continuity are also formidable, and another boom and bust commodity price cycle cannot be ruled out. Volatility may be the new name of the game.

In the New Policies Scenario (NPS), global oil demand growth slows but does not peak before 2040. Demand in 2040 is 106 mb/d, 11 mb/d greater than today. Demand in 2040 has been revised up by more than 1 b/d compared with last year’s Outlook largely because of faster near-term growth and changes to fuel efficiency policies in the United States. China becomes the world’s single largest consumer of oil in the 2030s and the largest net oil importer in history, importing over 13 mb/d in 2040. The United States dominates production growth to 2025: production increases by over 5 mb/d during that period to a peak of 18.5 mb/d. US production then starts to fall and OPEC steadily increases its share of total oil supply.

In the Sustainable Development Scenario (SDS), determined policy interventions to address climate change lead to a peak in global oil demand around 2020 at 97 mb/d. Demand peaks in nearly all countries before 2030. By 2040, cars that rely solely on gasoline and diesel are 40% more efficient than today; there are 930 million electric cars on the road (50% of the global car fleet); a quarter of buses are electric; and nearly 20% of fuels used by trucks are low or zero carbon. There are also major changes in most other sectors and as a result, total oil demand in 2040 in this scenario is 25 mb/d lower than today.

The only sector to register any growth is petrochemicals. Plastics recycling increases significantly from today’s levels which offsets the need for around 1.5 mb/d of oil demand in 2040. However, with few alternatives available, oil use as a petrochemical feedstock grows by 3.3 mb/d in the period to 2040.

On the supply side, lower demand and prices mean that production levels are down across the board. Although containing many of the least-cost suppliers, members of OPEC are assumed to maintain a policy of market management in this scenario (as in the other scenarios) and so their share of the market remains below 45% out to 2040.