Research
In this paper Philip Geurts explores the ever-growing global demand for oil and the challenges it poses for policymakers in Asia and Europe. Despite the ongoing discourse on transitioning away from fossil fuels, the relentless demographic growth in developing nations and industrial development continue to propel oil demand upwards, projected to hover around 100 million barrels per day into the 2030s. The recent Russian invasion of Ukraine, its repercussions on global energy markets, and escalating geopolitical tensions further underscore the urgency of addressing the security of oil supply. Geurts predicts that oil will remain integral to both Europe and Asia up to 2030, with European demand likely to decline more rapidly beyond that point, while Asia’s consumption could continue to grow through 2040 as its industry and transport sectors develop.
Given insufficient domestic reserves, both regions will rely on global markets to meet their oil demand, with the Middle East emerging as the world’s principal supplier of crude oil. The geopolitical dynamics between Europe and the Middle East become increasingly significant, particularly in light of the long-term contracts the Middle East holds with its Asian clients. This competition for political rapport with major fossil fuel suppliers adds a layer of complexity to the security of supply equation.
However, Geurts notes that developments on the supply side will have a limited impact on oil access in Europe and Asia. The global nature of the oil market and the relative inflexibility of supply in the short term, except for the agile US shale industry, contribute to the challenges. Sustained underinvestment in hydrocarbon production since 2014 has further reduced OPEC’s spare capacity, amplifying concerns about supply security.
Geurts suggests that addressing society’s continued reliance on oil is crucial. With large-scale substitutes still in their infancy for heavy road transport, aviation, shipping, and the petrochemical industry, the vulnerability of both Europe and Asia to oil supply disruptions is expected to persist in the coming decade. Policymakers are urged to focus on reducing dependency while navigating the complex landscape of global oil dynamics.
Author: Philip Geurts, Oil Analyst at BloombergNEF
This paper is part of the Europe in the Indo-Pacific Hub (EIPH) Guest Author Series: Access or Absence in an era of geopolitical competition: insights on critical resources, global value chains, and maritime security. Edited by Paul van Hooft, Benedetta Girardi and Alisa Hoenig.
The research for and production of this report was made possible by a financial contribution from the Taipei Representative Office in the Netherlands to the Hague Centre for Strategic Studies. The conclusions and recommendations presented in this report are the result of independent research. Responsibility for the content rests with the authors and the authors alone.
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