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New York CNN Business —  

The world’s appetite for oil is still growing, albeit at a slower pace.

Despite the rise of electric vehicles, the International Energy Agency does not see oil demand growth plateauing through at least 2024.

“There is no peak demand on the horizon,” the energy watchdog said in a report published on Monday.

Oil demand will rise by 7.1 million barrels per day by 2024, the IEA said. That would represent “modestly” slower demand growth for crude oil, which powers the world economy.

Fast-growing emerging markets continue to voraciously gobble up oil. China and India will account for almost half the global demand growth, the IEA said.

Even though the appetite for crude oil will be hurt by fuel efficiency gains and electric cars, the IEA said the impact will be overshadowed by insatiable demand for jet fuel and plastics.

A potential peak in oil demand is one of the central questions hovering above the energy market. The timing could impact trillions of billions of dollars of investment decisions and play a major role in the trajectory of greenhouse gas emissions.

Some believe the energy transition could arrive soon because of rising concerns about climate change.

DNV GL, an energy focused risk advisory firm, warned late last year that oil demand will likely peak in 2023, thanks in part to rapid electric vehicle sales.

BP (BP), one of the world’s largest oil producers, acknowledged in its 2019 annual report that oil demand will increase “much slower than in the past.” The UK company sees oil demand “plateauing” in the 2030s, which is further out than the IEA report forecasts.

BP expects the number of electric vehicles will surge to around 350 million by 2040, or roughly 15% of all cars.

Electric vehicle sales surge in China

China has been at the forefront of efforts pushing electric vehicles as a way to combat air pollution. Electric car sales there have boomed, replacing gas-guzzling vehicles.

While total passenger vehicle sales fell 4% in China last year, electric vehicle sales surged 61% to 1.3 million, the IEA said.

The IEA said it’s possible that China achieves its goal of deploying 5 million electric vehicles by the end of 2020. The agency expects that by 2024, electric passenger cars in China will replace about 160,000 barrels per day of gasoline. Electric buses will likewise eat into oil demand.

Plastics, aviation demand soar

Still, that is not enough to offset the need for oil elsewhere.

The IEA said that nearly one-third of oil demand growth through 2024 will come from petrochemicals, which are used to make plastic. And that’s despite recent pressure to move away from plastic and encourage recycling.

“Around the world, more consumer demand means more plastic, which in turn means more petrochemicals,” the IEA said.

More than 50 major petrochemical projects are expected to come online through 2024, the report said.

And then there’s the booming aviation market, which continues to consume vast amounts of jet fuel.

“The air travel industry has witnessed a spectacular expansion thanks to rising passenger numbers,” the IEA said, adding that demand will continue to grow “strongly.”

The trend has been driven by rising incomes in emerging markets, where airports and airline fleets are expanding rapidly. Asia, led by China and India, is expected to account for three-quarters of the aviation industry’s demand growth through 2024, the IEA said.

Norway is dumping some oil stocks

Despite the upbeat demand predictions from the IEA, some prominent investors are already hedging their oil exposure.

Last week, Norway’s government proposed to have its $1 trillion sovereign wealth fund gradually phase out investments in oil exploration and production companies.

It would be a major statement by Norway, which is Western Europe’s largest oil producer and amassed its wealth by producing oil.

But Norwegian Finance Minister Siv Jensen said the country wants to guard against a “permanent” decline in oil prices.