The bank had earlier expected that the continuation of high oil prices above $100 per barrel since 2011 would result in peak oil demand by 2025 as consumers moved to smaller and more fuel efficient cars.

"Eventually, high prices would have led to substitution out of oil altogether, whether towards other cheaper fossil fuels like natural gas or out of fossil fuels and towards alternatives and renewables and switched to alternative or renewable fuel," BofA said in a note on Jan. 23.

It now estimates that if prices stay in the $50 to $70 per barrel range over five years, peak demand would be pushed out past 2030.

Crude oil prices LCOc1 CLc1 have more than halved to below $50 a barrel since June due to a growing glut of oil. [O/R]

The impact of permanently lower prices on oil consumption can be profound in the long run, the bank said. "These long-term demand trends may have played a role in OPEC's November decision to keep output steady."

With the collapse in oil prices, the bank now expects to see a large structural pick-up in diesel and gasoline vehicle sales in major emerging markets and a deceleration in oil demand decline rate in developed markets as consumers opt to drive more in larger cars.

(Reporting by Arpan Varghese and Ratul Ray Chaudhuri in Bengaluru; Editing by Marguerita Choy)