Thursday 15 August 2024

‘Global oil production will surpass demand’

The Oil 2024 report by International Energy Agency (IEA) predicts that a growth in global oil production, led by the US and other producers in the Americas, is expected to outstrip demand between now and 2030.

Strong demand from fast-growing economies in Asia, as well as from the aviation and petrochemicals sectors, is set to drive oil use higher in the coming years.

But this increase in demand is expected to be offset by a rise in electric vehicles, fuel efficiency improvements in conventional vehicles, declining use of oil for electricity generation and economic shifts.

As a result, global oil demand, which averaged at 102 million barrels per day in 2023, will level off at 106 million barrels per day towards the end of the decade.

On the other hand, total supply capacity is expected to rise to nearly 114 million barrels a day by 2030 – 8 million barrels per day above global demand.

Spare oil capacity could have significant consequences for OPEC and non OPEC markets and economies.

IEA Executive Director Fatih Birol, said: '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. This year, we expect demand to rise by around 1 million barrels per day.

'This report’s projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place.'

Despite a decrease in growth, demand is still expected to be 3.2 million barrels per day higher in 2030 than in 2023.

Major policy changes and faster technological advancements are necessary to speed up the energy transition, especially in emerging economies.