As a result of increased production and a shift to cleaner energy sources, the world is expected to have a “major surplus” of oil by 2030, according to an annual study released by the International Energy Agency (IEA) on Wednesday.
The International Energy Agency (IEA) predicted that global demand would “level off” at 106 million barrels per day (bpd) by the end of this decade, while total supply capacity may reach 114 million bpd. This would result in a “staggering” eight million bpd surplus for which the oil markets should brace.
The prediction was made a few days after the major producers of crude oil, known as OPEC+, announced they would begin to reduce their output this autumn. The goal of the production cuts was to keep prices high in the face of concerns about a slowdown in global demand.
The aviation and petrochemical industries, as well as rapidly rising Asian nations like China, will continue to fuel the world’s oil demand, which is expected to reach 102 million barrels per day in 2023, according to an IEA assessment.
However, the move to electric vehicles, together with improvements in conventional vehicle fuel economy and a decrease in the Middle Eastern countries’ reliance on oil for electricity generation, would help keep the rise in overall demand to about two percent by 2030.
The United States and other American nations appear to be leading the growth in oil production capacity at the same time, resulting in the prediction of an eight million barrel surplus, a level last attained during the 2020 Covid-19 lockdowns.
“Spare capacity at such levels could have significant consequences for the US shale industry and for oil markets, including producer economies in OPEC and beyond.”
The agency’s executive director, Fatih Birol, said in a statement that “growth in global oil demand is slowing down and set to reach its peak by 2030 as the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts.”
He stated, “Oil companies may want to ensure that their business strategies and plans are ready for the changes occurring.”
