Demand for Crude Oil May Have Peaked Last Year, FGE Says

(Bloomberg) -- Demand for crude oil may have peaked in 2025, partly as higher need for fuels is increasingly met by biofuels, according to FGE NexantECA. 

“The world will keep consuming more liquids, but not necessarily more crude,” Chairman Emeritus Fereidun Fesharaki and analyst Cuneyt Kazokoglu said in a report. Demand is increasingly being met by biofuels and hydrocarbons derived from processing natural gas, such as ethane. 

FGE NexantECA sees some oil demand lost after this year’s Hormuz crisis disrupted flows through the key Middle East chokepoint. It notes the crisis came about six years after Covid, echoing the gap between the 1973 and 1979 oil shocks that led to lasting demand destruction in power generation.

This time around, road transport — which accounts for about 45% of global oil demand — is at the center of substitution, with electric vehicles eroding gasoline demand and beginning to hit diesel consumption.

Demand in biofuels and natural gas liquids combined has grown faster than crude from 2019 to 2025, according to FGE NexantECA. All US oil demand growth since 2010 has come from ethane. Biofuels made up 10% of oil demand growth in the last decade and its role will increase as uptake by airlines and ships expand. 

“Just like the 1970s, two big crises six years apart have shocked the oil market in the last decade,” Fesharaki and Kazokoglu wrote. The trend “creates a growing challenge for refiners, upstream investment and OPEC policy.”

--With assistance from Grant Smith.

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