The world will accumulate a “large” surplus of oil by 2030: IEA June 13, 2024

The IEA warned oil companies to be “prepared for the changes that are taking place” (Photo: MARIO TAMA)

By AFP - Agence France Presse

The world will accumulate a “large” surplus of oil by 2030: IEA

The world is likely to have a large oil surplus by 2030 as production increases while the transition to clean energy eases demand, the International Energy Agency said on Wednesday.

Global demand is expected to “stabilize” at 106 million barrels per day (bpd) by the end of this decade. At the same time, overall supply capacity could reach 114 million bpd, the IEA said in an annual report.

The Paris-based agency said this would result in an “impressive” surplus of eight million bpd for which oil markets should prepare.

“As the recovery from the pandemic loses momentum, clean energy transitions advance and the structure of China's economy changes, global oil demand growth is slowing and is expected to peak in 2030,” said IEA Executive Director Fatih Birol.

With “the emergence of a large supply surplus this decade”, said Birol, “oil companies may want to make sure that their strategies and business plans are prepared for the changes taking place”.

The forecast was made days after the OPEC+ group, made up of the main oil producers, signaled that it would begin reducing production cuts this fall, implemented in an attempt to prop up prices against fears of weakening world demand.

In its report, the IEA noted that rapidly developing Asian countries such as China and India, along with the aviation and petrochemical sectors, would still drive oil demand, which stood at 102 million bpd in 2023.

However, the shift to electric cars, along with fuel efficiency gains for conventional vehicles and the decrease in oil use by Middle Eastern countries for electricity production, would help limit the overall increase in demand to around 4% by 2030.

- 'Lower oil price environment' -

The IEA said that demand in advanced economies is expected to continue declining for decades, falling from 46 million bpd in 2023 to less than 43 million bpd in 2030 - the lowest figure since 1991, except during the pandemic.

At the same time, oil production capacity looks set to increase, led by the United States and other countries in the Americas, leading to the prediction of a surplus of eight million barrels - a level reached only during the COVID-19 lockdowns in 2020.

“Such a large oil production buffer could usher in a lower oil price environment, posing difficult challenges” for the US shale sector and the OPEC+ bloc led by Saudi Arabia and Russia, the report said.

“Such a large cushion could upend OPEC+'s current market management strategy aimed at sustaining prices,” it said.

In a separate monthly report on the global oil market, the IEA cut its demand growth forecast for 2024 to 960,000 bpd, compared to 1.1 million bpd in its previous outlook.

Its forecast for 2025 has also been reduced from 1.2 million bpd in its May report to 1 million bpd.

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