The International Energy Agency (IEA) has projected a substantial surplus of oil by 2030 due to increased production and the ongoing transition to clean energy, according to its latest annual report released on Wednesday.
By the end of the decade, global demand is anticipated to plateau at around 106 million barrels per day (bpd), while overall supply capacity could soar to 114 million bpd. This imbalance could lead to a remarkable surplus of eight million bpd, posing significant challenges for oil markets, as stated by the IEA.
The report’s publication closely follows an announcement from the OPEC+ alliance indicating plans to gradually reverse output cuts starting in the autumn. These cuts were initially implemented to stabilize prices amid concerns about weakening global demand.
While countries like China and sectors such as aviation and petrochemicals are expected to continue driving oil demand, the IEA highlights the growing influence of electric vehicles, improved fuel efficiency in traditional automobiles, and reduced oil usage in electricity generation across the Middle East. These factors are projected to limit demand growth to approximately four percent by 2030, compared to 2023 levels of 102 million bpd.
Simultaneously, there is a surge in oil production capacity, led by the United States and other American nations. This surge is predicted to result in an eight-million-barrel surplus, a level reminiscent of the excess seen during the 2020 COVID-19 lockdowns.
The IEA warns that such high levels of spare capacity could have significant ramifications for oil markets, affecting producer economies within OPEC and beyond, as well as the US shale industry.
Fatih Birol, the executive director of the IEA, emphasized that as the global economy rebounds from the pandemic and transitions towards cleaner energy sources, the growth in oil demand is slowing down, with a peak expected by 2030. Birol urged oil companies to adapt their business strategies and plans to align with these evolving trends.
