Growth in global oil demand is expected to reach its peak in 2030. These are the new forecasts from the International Energy Agency (IEA), published on June 12. According to its director, Fatih Birol, “As the pandemic recovery falters, clean energy transitions advance, and the structure of China’s economy evolves, global oil demand growth slows,” until reaching a peak before the end of the decade.
The IEA thus warns of an excess supply of oil “major” on this horizon. According to the agency’s forecasts, production capacities should increase by 6 million barrels per day by 2030 worldwide, to reach 114 million barrels per day, while demand would stand at 106 million barrels per day. , a surplus of almost 8 million. “Which suggests that oil companies may want to ensure their business strategies and plans are prepared for the ongoing changes,” continues Fatih Birol.
Stranded Assets Risk
The increase in demand is expected to be driven by emerging economies in Asia, including increased consumption of oil for transportation in India and increased use of booming biofuels and petrochemicals in China. On the other hand, in advanced economies, demand is expected to continue its decline, which has already been underway for several decades, falling from nearly 46 million barrels per day in 2023 to less than 43 million barrels per day in 2030.
“Such surplus production capacity could pave the way for a lower oil price environment, raising difficult challenges” particularly for the American shale industry and the OPEC+ bloc (Organization of the Petroleum Exporting Countries), led by Saudi Arabia and Russia, points out the report. “Oil and gas companies continue their expansion plans in fossil fuels, developing new infrastructure that risks quickly becoming stranded assets, causing overcapacity in supply compared to global demand.”, comments Louis-Maxence Delaporte, energy analyst at Reclaim Finance, for Novethic.
The IEA’s forecasts therefore clash with this expansion strategy of oil companies, the justification of which lies precisely in the growth in demand. In France, TotalEnergies constantly explains that it “only” responds to demand. He is “necessary to put new hydrocarbon fields into production in order to combat the natural decline of existing fields and meet global demand”repeated its CEO, Patrick Pouyanné, before the senatorial commission of inquiry into Total.
How Total anticipates this decline
Contacted after the publication of the AIE, the group details its strategy to Novethic. “Between 2018 and 2030, our oil production will remain generally stable. Above all, we seek to compensate for the natural decline of oil fields, which lose around 4% of their production each year. It is this maintenance of our production at a stable level between now and 2030 that justifies our new oil projects,” they explain to us. The major also warns about the forecasts of the IEA, which would have adopted “an optimistic vision of the penetration of electric vehicles in the United States far from being consensual”.
Regardless, faced with the drop in demand and oil prices, TotalEnergies claims to have anticipated and refocused its portfolio on low-cost projects for ten years. “We went from a breakeven point of 90 dollars per barrel in 2014 to less than 25 dollars in 2024 (the breakeven point is the price level for a barrel of Brent above which the oil company makes money, editor’s note). This allows us to remain competitive even in a context of falling demand and therefore falling prices in the medium and long term”, explains TotalEnergies. The group thus indicates that it has sold its tar sands assets in Canada and its shares in the oil company Petrocedeño in Venezuela, operations considered too costly in a context of falling long-term demand.
For its part, Saudi Arabia asked its national company Aramco at the start of the year to maintain its oil production capacity at 12 million barrels per day, abandoning a plan to increase it to 13 million announced in 2021. “This could reflect a recognition of the rapid growth in excess global crude oil production capacity”, notes the IEA in its report. More broadly, within OPEC+, medium-term forecasts for the coming years are much higher than those of the IEA. However, according to the IEA, it is mainly non-OPEC+ countries, led by the United States, which will support new production capacities.
