Petrochemicals Set to Dominate Oil Demand Growth by 2030, Says IEA

Key Highlights

• Brent and WTI crude fell by 0.45% and 0.59%, respectively, as of July 1
• Petrochemicals to account for 17.4% of global oil use by 2030: IEA
• China’s ethylene and propylene capacity surged over 100% since 2019
• US ethane and LPG exports boost Asia’s polymer production and trade

Oil and petroleum Market Price

• As of 1st July 2025, crude oil prices showed a marginal decline. Brent Crude is currently trading at $66.44 per barrel, down by 0.45%. It opened today at $66.58, slightly lower than yesterday’s closing price of $66.74 per barrel. 
• Similarly, WTI (West Texas Intermediate) is trading at $64.73 per barrel, reflecting a 0.59% drop. It opened at $64.93, compared to its previous closing of $65.11 per barrel. 
• The downward movement is likely influenced by broader market sentiment and global demand-supply dynamics.
• While the report primarily focuses on volume and demand trends, key pricing impacts can be inferred. Crude oil demand from the petrochemical sector is projected to increase by 2.1 million barrels per day (bpd) by 2030, reaching 18.4 million bpd, reflecting a stronger pull on oil-based feedstocks such as naphtha (to reach 10.2 million bpd) and LPG/ethane (to hit 8.2 million bpd). This rising demand is expected to influence upstream crude oil pricing and refining margins, particularly in naphtha and LPG-rich markets like the US, China, and the Middle East.

Market Demand and Supply

• The petrochemical industry is set to become the dominant driver of oil demand growth from 2026 onwards, according to the International Energy Agency (IEA). Petrochemicals will account for one in every six barrels of oil consumed by 2030, with their share of oil use increasing from 15.8% in 2023 to 17.4% in 2030. 
• This demand is being fueled by growing usage of plastics and synthetic fibers in packaging, construction, consumer goods, and clean energy applications. Meanwhile, the refining sector faces challenges due to excess net capacity, prompting possible refinery shutdowns.
• On the supply side, China and the US have driven major feedstock expansion. China has added 2.2 million bpd of feedstock capacity from 2019 to 2024, while the US saw a 790,000 bpd increase in ethane demand. 
• However, capacity additions from ethane-focused crackers in the US offer limited propylene output, potentially creating tighter balances in global markets that rely on naphtha or propane dehydrogenation (PDH).

Market News: Petrochemicals to Lead Oil Market Growth

• According to the IEA's Oil 2025 – Analysis and Forecast to 2030 report, the ongoing expansion in petrochemical feedstock use—mainly naphtha and LPG/ethane—is the cornerstone of future oil demand. 
• From 2019 to 2024, more than 95% of the net global oil demand growth came from petrochemicals. China’s ethylene and propylene capacity surged over the same period by 110% and 130%, respectively, significantly altering trade flows and pressuring European and East Asian producers.
• The US has also rapidly ramped up natural gas liquid (NGL) production, becoming a top exporter of ethane and LPG, much of which is directed to China and non-OECD Asia.
• Polymer exports from the US increased by 38%, equivalent to 350,000 bpd of ethane use. These shifts highlight the increasing interdependency of global petrochemical trade networks and feedstock availability.

Expert Opinion: Recycled Polymers Not Yet a Threat to Virgin Demand

• The IEA projects that petrochemical feedstocks will be the primary growth engine for oil demand through 2030, contrasting with slowing growth in transportation fuels due to electrification and efficiency gains. 
• Despite the growing interest in recycled polymers, the impact on virgin feedstock demand remains limited in the near term. China and the US will continue to be the central players driving both demand and global feedstock dynamics.