Outlook on the EU road fuel consumption through 2035

Abstract

Saudi Aramco (SAO) is enhancing its refinery capacity mainly for export. The company’s export share to Europe increases rapidly and has reached 20% since 2016. In light of this, it is of value for SAO to understand the future trend of road gasoline and diesel demand in Europe. This research, which was conducted in the Market Insights & Technology Intelligence (MITI) group of Aramco Overseas Company (AOC), assessed the relevant policy in the European Union (EU), automaker’s future strategy and the effect of electric vehicle (EV) uptake. A forecast was derived from an existing outlook with respect to these factors on road energy demand through 2035, including diesel, gasoline and electricity. Current growth in road oil fuel demand and the rising diesel share will continue until the cost of EV breaks through the market threshold for mass commercialisation. The penetration is anticipated to happen in 2023. After that, both oil-based fuels for road transportation and the share of diesel in the fossil fuels will decline due to the substitution effect of EVs. By the end of the forecast period (2035), fossil fuel will continue to govern the road fuel demand and will be dominated by diesel. Backed by policy and automakers, EV penetration will accelerate after the breakthrough, which suggests a disruptive transition of road energy structure will happen soon after the forecast period.