An oil pumping unit is displayed near the Caren Oil Company in Monahans, Texas, on March 27, 2024.
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A U.S.-led surge in global oil production is expected to outpace demand growth between now and the end of the century, pushing spare capacity to unprecedented levels and threatening to upend OPEC+’s market management, the International Energy Agency said on Wednesday.
The forecast prompted a stern warning to big oil companies from International Energy Agency executive director Fatih Birol, who suggested the world’s largest energy giants may want to adjust their business strategies in light of the changes taking place.
Oil demand growth will slow, eventually peaking at nearly 106 million barrels per day in 2030, the global energy regulator said in its latest mid-term market report titled Oil 2024. level of 102 million barrels per day.
At the same time, the IEA predicts that total oil production capacity will surge to nearly 114 million barrels per day by 2030, 8 million barrels per day higher than expected global demand.
The IEA said this would lead to unprecedented levels of spare capacity – except during the peak of Covid-19 lockdowns in 2020.
It warned that these developments could have a “significant impact” on oil markets, including the U.S. shale industry and producing economies from OPEC and other countries.
“As the epidemic rebound loses momentum, the clean energy transition advances, and China’s economic structure changes, global oil demand growth is slowing and will peak in 2030,” the IEA’s Birol said in a statement.
He added: “This report’s forecasts, based on the latest data, show a significant supply glut this decade, suggesting oil companies may want to ensure their business strategies and plans are ready for the changes that are taking place.”
The report comes as countries seek to transition away from fossil fuels and momentum is building for clean and energy-efficient technologies. The combustion of fossil fuels such as coal, oil and natural gas is Key Contributors to the Climate Crisis.
According to the IEA, fossil fuels’ share of global energy supply has remained around 80% for decades, although it expects By 2030, this proportion will drop to around 73%.
Oil demand in developed economies will decline further
Although oil demand growth is expected to slow down, the IEA pointed out that without stronger policy measures or behavioral changes, crude oil demand is still expected to be approximately 3.2 million barrels per day higher in 2030 than in 2023.
The company said the growth was mainly driven by strong demand from Asia’s fast-growing economies and the aerospace and petrochemical industries.
However, the IEA said oil demand in developed economies would fall below 43 million bpd by 2030, down from nearly 46 million bpd last year. The IEA said that aside from the coronavirus pandemic, the last time oil demand in developed economies was at such low levels was in 1991.
A landmark year 2021 In the report, the IEA urges no new oil, gas or coal development if the world is to achieve net-zero emissions by 2050.
The report’s findings have been widely criticized by some OPEC+ producers, who advocate dual investment in hydrocarbons and renewables until green energy can unilaterally meet global consumption demand.
OPEC+ refers to an influential energy alliance led by Saudi Arabia and composed of OPEC and non-OPEC partners.
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