Peak Demand: A Seismic Shift in Global Oil Markets

This New York Fed article explores a pivotal shift in global oil markets. The once-prominent 'peak oil' theory, predicting declining oil production, was overturned by the shale revolution. Now, a new 'peak demand' narrative suggests that the rise of EVs and other low-carbon technologies will flatten and eventually decrease global oil consumption. This transforms the market into a zero-sum game, where production growth in one region lowers prices, squeezing out higher-cost producers elsewhere. The article analyzes the adaptability of US shale producers and the impact of EV adoption, noting that while some agencies predict peak oil demand around 2030, others foresee continued growth. Ultimately, global oil markets are transitioning from supply-driven to demand-driven dynamics, with profound implications for the global economy and energy landscape.