New report from IEA features outlook on global oil markets
In a new report, the International Energy Agency (IEA) sees oil markets being comfortably supplied through 2030, but an unwavering focus on energy security will remain crucial as the sector transforms.
Oil 2024, the latest edition of the IEA’s annual medium-term market report, examines the key trends over the next several years.
It found that growth in the world’s demand for oil is expected to slow in the coming years as energy transitions advance. At the same time, global oil production is set to ramp up, easing market strains and pushing spare capacity towards levels unseen outside of the Covid crisis.
It added that strong demand from fast-growing economies in Asia, as well as from the aviation and petrochemicals sectors, is set to drive oil use higher in the coming years. But those gains will increasingly be offset by higher electric car sales, fuel efficiency improvements, declining use of oil for electricity generation in the Middle East, and structural economic shifts.
Thus, the report forecasts that global oil demand, which, including biofuels, averaged just over 102 million barrels per day in 2023, will level off near 106 million barrels per day towards the end of this decade.
Further, it said a surge in global oil production capacity, led by the United States and other producers in the Americas, is expected to outstrip demand growth between now and 2030. Total supply capacity is forecast to rise to nearly 114 million barrels a day by 2030 – some 8 million barrels per day above projected global demand.
This would result in levels of spare capacity never seen before other than at the height of the Covid-19 lockdowns in 2020. This spare capacity could have significant consequences for oil markets – including for producer economies in OPEC and beyond, as well as for the US shale industry.
“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,” IEA Executive Director Fatih Birol said.
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. The increase is set to be driven by emerging economies in Asia, along with greater use of jet fuel and feedstocks from the booming petrochemicals industry.
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. Apart from during the pandemic, the last time oil demand from advanced economies was that low was 1991.
The report also said that producers outside of OPEC+ are leading the expansion of global production capacity. They account for three-quarters of the expected increase to 2030.
In addition, global refining capacity is on track to expand by 3.3 million barrels per day between 2023 and 2030, well below historical trends.
