Paris, 12 June 2024, (GNP): The International Energy Agency (IEA) reported on Wednesday that the world will probably experience a significant oil surplus by 2030. This is due to increased production combined with a decrease in demand as the transition to clean energy progresses.
Global demand is projected to “level off” at 106 million barrels per day (bpd) by the end of this decade, while supply capacity could reach 114 million bpd, resulting in an “astounding” surplus of eight million bpd that oil markets should brace for, according to the IEA.
This forecast comes shortly after the OPEC+ group announced plans to reverse output cuts this autumn, which were initially implemented to support prices amid fears of declining global demand.
The IEA report highlighted that rapidly developing Asian nations like China, along with the aviation and petrochemical industries, will continue to drive oil demand, which was 102 million bpd in 2023.
However, the rise of electric vehicles, improvements in fuel efficiency for conventional cars, and reduced oil use for electricity generation in Middle Eastern countries are expected to restrict the overall demand increase to about two percent by 2030.
Meanwhile, oil production capacity is anticipated to surge, primarily led by the United States and other American nations, contributing to the forecasted eight-million-barrel surplus—a level last seen during the Covid-19 lockdowns of 2020.
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“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 US shale industry,” the IEA said.
“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,” the agency’s executive director Fatih Birol said in a statement.
“Oil companies may want to make sure their business strategies and plans are prepared for the changes taking place,” he said.
