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Global oil demand is expected to slow in the coming years as energy transitions advance, resulting in a “major surplus” by 2030, the International Energy Agency said in an annual report published Wednesday.
Global oil demand will level off near 106 million barrels per day towards the end of this decade, while overall supply capacity could rise to nearly 114 million bpd — resulting in a staggering 8 million barrels per day above projected global demand, the report finds.
“As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts, growth in global oil demand is slowing down and set to reach its peak by 2030. This year, we expect demand to rise by around 1 million barrels per day,” said IEA Executive Director Fatih Birol in a statement.
“This report’s projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place.”
Big Oil companies: Exxon Mobil (XOM), Chevron (CVX), BP (BP), Shell (SHEL), TotalEnergies (TTE)
The forecast follows a monthly report by the Organization of the Petroleum Exporting Countries, which said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
The IEA noted that, despite the slowdown in growth, global oil demand is still forecast to be 3.2 million barrels per day higher in 2030 than in 2023 unless stronger policy measures are implemented. The increase is set to be driven by emerging economies in Asia, notably China.
By contrast, oil demand in advanced economies is expected to continue its decades-long decline, falling from close to 46 million barrels per day in 2023 to less than 43 million barrels per day by 2030, the IEA said.
At the same time, producers outside of OPEC+ are leading the expansion of global production capacity to meet this anticipated demand, accounting for three-quarters of the expected increase to 2030.
“This would result in levels of spare capacity never seen before, other than at the height of the Covid-19 lockdowns in 2020. Spare capacity at such levels could have significant consequences for oil markets – including for producer economies in OPEC and beyond, as well as for the U.S. shale industry,” the IEA said.
Investors in the commodities market, meanwhile, had their eyes on the U.S. inflation numbers and the Federal Reserve’s policy decision.
