Will the world produce more oil than it demands? The International Energy Agency expects a “major surplus” in oil markets by 2030, under the cumulative effect of increased production and the transition to clean energy which moderates demand .
Global demand is expected to stabilize at 106 million barrels per day towards the end of the decade, while overall supply capacity could reach 114 million barrels, the IEA estimated in its annual oil report on Wednesday.
This would result in a “staggering” surplus of 8 million barrels per day for which markets should prepare, estimates the IEA.
“As the pandemic rebound falters, the clean energy transition advances, and the structure of China’s economy evolves, global oil demand growth slows and is expected to peak by 2030” , said Fatih Birol, executive director of the IEA, quoted in a press release.
In this environment of “major oversupply,” “oil companies may want to ensure their strategies and business plans are prepared for the ongoing changes,” he added.
The IEA’s annual report on the oil markets comes a few days after the decision of the oil exporters cartel and its allies united in OPEC + to gradually lift its reductions in black gold production, thus releasing ballast on this supply shortage policy initiated at the end of 2022 to support prices.
In its report, “based on current policies and market trends”, the IEA first notes that “strong demand from fast-growing Asian economies” such as India and China, “as well as that aviation and petrochemical sectors” should continue to stimulate oil consumption “in the years to come”.
The OECD energy agency nevertheless emphasizes that “these gains will be increasingly offset” by factors such as “the increase in sales of electric cars, the improvement in the energy efficiency of conventional vehicles (thermal , Editor’s note), the reduction in the use of oil for electricity production in the Middle East. All of this data should help limit growth in demand to +4% by 2030, to 106 million barrels per day, compared to 102 million in 2023.
In particular, notes the IEA, “oil demand in advanced economies is expected to continue its decades-long decline, falling from nearly 46 million barrels per day in 2023 to less than 43 million barrels per day in 2030” , its lowest level since 1991, apart from the period of the COVID-19 pandemic.
“Low price environment”
Around the world, governments and companies are accelerating investments in clean energy to reduce greenhouse gas emissions from fossil fuels, which heat the planet.
At the same time, the IEA expects global oil production to increase, driven by non-OPEC+ producers, notably the United States. Global supply would thus exceed forecast demand from 2025, which would generate a surplus of 8 million barrels towards the end of the decade, “levels never seen outside of the COVID crisis”.
“Such surplus production capacity could pave the way for a lower oil price environment, raising difficult challenges” for the US shale industry and the OPEC+ bloc led by Saudi Arabia and Russia, according to The report.
In its monthly oil report, which explores shorter-term trends, the Energy Agency has revised its forecast for global oil demand growth for 2024 slightly downward, now putting it at 960 000 daily barrels, after having already lowered its forecasts last month to +1.1 million barrels. And for 2025, the IEA expects “the gloomy oil outlook” to continue, with “a modest increase of 1 million barrels per day”, below its previous estimate which predicted growth of 1 million barrels per day. .2 million.