Transportation demand for oil to peak by late-2020s: Wood Mackenzie

Transportation demand for crude oil will peak globally in the late-2020s due to improved internal combustion engine efficiency standards, increased use of electric vehicles and consumer preferences, analyst research firm Wood Mackenzie said in a new report.

"As a result, many oil production and refining companies are emphasizing chemicals - particularly olefins and aromatics - as a key target area for future crude oil long-term demand growth," it noted.

As dedicated crude-oil-to-chemicals technologies are being developed by Saudi Aramco, SABIC and ExxonMobil, many traditional oil refineries are considering retrofitting to maximize production of chemical feedstocks rather than transportation fuels.

Other major strategic moves will take the form of mergers, acquisitions, and joint ventures to more tightly connect companies that have crude oil/refined product supply with chemical markets and demand, e.g. Saudi Aramco becoming one of the fifth largest chemical companies after acquiring SABIC stake.

"These trends will force national oil companies and international oil companies to greatly increase participation in petrochemical markets," the report added.