The IEA predicts a stabilization of demand towards the end of 2030
Speaking as part of its annual oil report, the IEA indicates that global oil demand should stabilize at 106 million barrels per day by 2030, with global supply capacity potentially reaching at the same time. 114 million barrels.
“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” , declared Fatih Birol, executive director of the IEA.
Strong Asian demand offset by the increase in EVs
While certainly, the IEA notes that strong demand from fast-growing Asian economies like India and China, as well as the aviation and petrochemical sectors are expected to continue to drive oil consumption in the years to come , however, it believes that these increases in terms of demand will be increasingly offset by various factors such as the increase in sales of electric cars, the improvement in the energy efficiency of thermal vehicles (de facto leading to a drop in consumption) and the decline in the use of oil for electricity generation in the Middle East.
According to the annual report published last April by the IEA, sales of electric cars are expected to continue their strong growth in 2024, particularly in China.
A reduction in manufacturer margins, a price war, the volatility of the prices of raw materials necessary for the manufacture of batteries, high inflation and the removal of subsidies for the purchase of EVs in certain countries such as Germany have caused… concern about the growth of the sector.
China, the leading market for the sale of electric cars, is less affected and “global sales remain solid,” notes the IEA.
This bout of weakness, however, is concentrated in certain European countries, notes the IEA. Ultimately, continues the Agency, growth in demand should be limited to an increase of 4% by 2030, to 106 million barrels per day, compared to 102 million in 2023.
The Agency forecasts that 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 level the lowest since 1991, outside the period of the Covid-19 pandemic.
Production overcapacity to be expected
But if demand is not expected to increase significantly in the next six years, the IEA expects a parallel increase in global oil production.
A situation resulting both from the policy pursued by producing countries that are not members of OPEC+ (a group bringing together the OPEC cartel and its partners, such as the United States. According to the Agency’s forecasts, the he global supply is expected to exceed forecast demand from 2025, leading to a surplus that she even describes as “staggering” of 8 million barrels towards the end of the decade, “levels never seen outside of the Covid crisis” she warns .
Markets and energy groups must prepare for a “stunning” surplus
In this environment of “major oversupply”, “oil companies may want to ensure that their strategies and business plans are prepared for the ongoing changes”, added Fatih Birol.
The Agency therefore believes that the markets must already prepare for such a situation.
“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, adds the report. While gas and oil are the major issues – more or less acknowledged – in current and past conflicts, we can therefore also fear an acceleration of international tensions… if this is not already the case…
Sources: IEA
