Peak oil demand before 2030 will usher in a major supply glut, the International Energy Agency says
- Global oil supply will rise 8 million barrels per day above projected demand, the IEA said.
- Meanwhile, global demand will plateau and peak before 2030.
An overflow of global oil supply will hit the market this decade as world consumption peaks ahead of 2030, the International Energy Agency said in its latest report.
Supply is expected to blow past projected demand starting in 2025, rising to a "staggering" 8 million barrels per day above the projected demand of 105.4 million barrels per day, the group said.
"World oil production capacity, led higher by the United States and other producers in the Americas, is forecast to outstrip demand growth over the 2023-2030 forecast and, barring the Covid pandemic period, inflate the world's spare capacity cushion to unprecedented levels," the report said.
This massive oil production buffer will likely bring about lower oil prices worldwide, an unwelcome prospect for major producers in both the US and the OPEC+ group, the IEA said. While OPEC and its allies are already suspending curtailing output, the reaction of the US shale industry may have wide-ranging consequences.
For consumers, demand will plateau at 105.6 million barrels per day by 2029, around 4% higher than last year's levels.
While emerging economies in Asia will help support consumption, the story is different for advanced regions; demand will continue a "decades-long decline," falling to its lowest level since 1991 by the decade's end.
"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," said IEA Executive Director Fatih Birol. This year, we expect demand to rise by around 1 million barrels per day."
The IEA has been broadcasting its projections of a coming end to the fossil fuel era since last year, when it first said a peak in demand was near.
That's not a view shared by those in the industry, and many commodity experts have since disagreed with the agency's outlook.
Some of the biggest pushback came from OPEC itself, with chief Haitham Al Ghais noting that peak demand warnings have been repeated since the 1880s — and have yet to manifest.