The International Energy Agency (IEA) predicts that global oil demand will peak by 2029 and start to decline in 2030, leading to a surplus in the market this decade. The IEA’s outlook contrasts with that of the Organization of the Petroleum Exporting Countries (Opec), which believes that demand will continue to rise beyond 2029. Oil demand is expected to plateau at 105.6 million barrels per day by 2029 and then slightly decrease in 2030 as electric vehicle usage increases and power generation shifts away from oil.
The IEA also anticipates that supply capacity will reach nearly 114 million barrels per day by 2030, with non-Opec+ countries, particularly the US, accounting for three-quarters of the increase. This surplus in supply could have significant implications for oil-producing nations, especially those in Opec, as well as the US shale industry. Demand growth is projected to be primarily driven by emerging economies in Asia, particularly in road transportation in India and the use of jet fuel and petrochemicals in China.
In a separate report, the IEA lowered its oil demand growth forecast for 2024 due to sluggish consumption in developed countries. The agency expects 960,000 barrels per day growth in 2024 and 1 million barrels per day growth in 2025, far below Opec’s projections of 2.25 million barrels per day for 2024 and 1.85 million barrels per day for 2025. The divergence in demand projections between the IEA and Opec is widening, with the IEA highlighting the importance of constantly analyzing data to provide accurate information for decision-makers and the public.
The shift towards a surplus in the oil market could have far-reaching implications for both oil-producing nations and consumers worldwide. This surplus may lead to lower oil prices and impact government revenues in countries that heavily rely on oil exports for income. The rise of new technologies like electric vehicles and renewable energy sources is likely to further accelerate the shift away from traditional oil consumption, affecting the long-term outlook for the global oil industry.
Overall, the IEA’s forecast highlights the need for oil companies and policymakers to adapt to the changing dynamics of the energy market and prepare for a future where oil demand may no longer be a driving force in the global economy. As countries around the world continue to focus on reducing greenhouse gas emissions and transitioning to cleaner sources of energy, the oil industry faces a challenging landscape that will require strategic planning and innovative solutions to thrive in the years to come.
