Global Oil Demand: Why Replacing Oil Is Harder Than It Looks

Global oil demand still exceeds 100 million barrels per day, and global oil demand persists because oil combines unmatched energy density, versatility, logistics, and cost at scale.

Why do societies still use so much oil? Transport, industry, and petrochemicals lean on a fuel that is dense, liquid at ambient conditions, easy to store and ship, and supported by century‑old infrastructure. The IEA Oil Market Report tracks consumption hovering around or above 100 mb/d, while the Energy Institute Statistical Review shows oil’s share spans road, aviation, shipping, and non‑combustion uses like plastics and solvents. 

Energy density and convenience matter. Per kilogram and per liter, liquid hydrocarbons carry far more usable energy than today’s batteries—one reason long‑haul trucking, aviation, and shipping remain difficult to electrify. Comparisons from U.S. DOE on gasoline gallon equivalents illustrate why replacing diesel in heavy duty segments is non‑trivial. Oil also benefits from a global logistics web—pipelines, refineries, storage—that delivers reliability and energy security at scale. 

Cost and access reinforce the picture. For emerging economies prioritizing growth, affordability is decisive. The Our World in Data energy mix shows oil still dominant in transport, while World Bank SE4ALL data links rising energy access to economic development. Where alternatives are available and cost‑competitive—metro rail, two‑ and three‑wheeler electrification—adoption accelerates. 

Why wind and solar cannot substitute one‑for‑one. Variable renewables excel at generating electricity, not liquid fuels. They supplied a small but fast‑growing part of global power in 2022–2023, yet most oil use is outside the power sector. Decarbonization therefore hinges on both electrifying end‑uses and creating low‑carbon molecules for the rest. Data from electricity mix series help quantify progress and gaps. 

What must alternatives match? Four tests keep oil in the system: availability, reliability, affordability, and security. Low‑carbon contenders—EVs, advanced batteries, hydrogen‑derived fuels, sustainable aviation fuels, and carbon capture—must clear these tests across full supply chains. Guidance from the IPCC and IEA Net Zero scenarios maps how quickly each pathway can scale given infrastructure and cost constraints. 

A pragmatic pathway to reduce oil use without shocks:

1) electrify what electrifies well (urban transport, rail, heat pumps for buildings);

2) push efficiency—vehicle standards, logistics optimization, lightweighting;

3) deploy low‑carbon fuels where batteries struggle (SAF for aviation, e‑methanol/ammonia for shipping, renewable diesel for heavy duty);

4) expand grids and charging to keep reliability high;

5) support R&D and early markets with contracts‑for‑difference and clean procurement so costs fall with scale. 

Oil’s persistence is not only politics; it is physics, infrastructure, and price. As alternatives pass the four tests—availability, reliability, affordability, and security—global oil demand can bend down decisively. That transition will be uneven across sectors and regions and will take decades—demand will fall fastest where superior substitutes already exist. 

Global oil demand: replacing a dense, liquid, affordable system at scale

Progress depends on matching oil’s utility with cleaner electricity and molecules—without sacrificing reliability or access in developing economies.