Latest update June 1st, 2026 12:37 AM
‘Demand for oil to slow in coming years’ – IEA says in new report
ExxonMobil has been ramping up production in Guyana
– but massive supply glut predicted by 2030
Kaieteur News – Oil demand growth is set to slow in the coming years and global demand will peak in 2029, while rising production will lead to a major glut this decade, the International Energy Agency (IEA) said in its new medium-term oil outlook on Wednesday.
The clean energy transition and the “stellar growth” in global EV sales are expected to lead to slowing oil demand growth with worldwide consumption set to peak in 2029 and begin falling the following year, according to the IEA’s report Oil 2024, the agency’s annual medium-term market report. World oil demand is being tempered by the clean energy transition, says the IEA, which has been a vocal proponent of a faster energy transition in recent years.
EV sales, which – according to the IEA – continue to surge, fuel efficiency improvements in ICE vehicles, structural economic shifts, and a decline in oil use for electricity generation in the Middle East are all set to start offsetting this decade the higher oil demand from the petrochemicals sector. “As a result, the report forecasts that global oil demand, which including biofuels averaged just over 102 million barrels per day in 2023, will level off near 106 million barrels per day towards the end of this decade,” the agency said.
At the same time, rising production capacity, led by the U.S. and other producers in North and South America, is expected to outstrip global oil demand growth between now and 2030.
“Total supply capacity is forecast to rise to nearly 114 million barrels a day by 2030 – a staggering 8 million barrels per day above projected global demand, the report finds,” said the IEA. “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,” said IEA Executive Director Fatih Birol.
“This year, we expect demand to rise by around 1 million barrels per day,” Birol added. The IEA holds a much more conservative view on global oil demand growth in 2024 compared to OPEC. The cartel sees demand growing by 2.25 million bpd this year compared to 2023, and by another 1.8 million bpd in 2025.
The report states that in a break with long-term trends, the front-loaded build in global oil production capacity is forecast to lose momentum and swing into contraction towards the end of our medium-term outlook, with the 2024 expansion of 1.8 mb/d reversing to a drop of 280 kb/d in 2030. This tracks the world’s pivot towards cleaner energy that leads to a plateau in our demand outlook by the end of the forecast and results in an effective OPEC+ spare crude oil capacity cushion of 6.8 mb/d, mostly concentrated in Saudi Arabia and the UAE.
According to the report such a massive oil production buffer could usher in a lower oil price environment, posing tough challenges for producers in the US shale patch and the OPEC+ bloc.
Given shale’s short-cycle time frame and price reactivity, some output could be at risk (see Shale price sensitivity scenarios). Moreover, reduced requirements for OPEC+ crude may put the alliance’s market management to the test. The huge amount of excess supply could also tempt some in the group to rationalize capacity plans. Saudi Arabia has already taken the lead, announcing in early 2024 a suspension of its 1 mb/d crude capacity expansion. At the same time, it is ramping up gas liquids, reflecting the expanding role of gas in Riyadh’s efforts to transition towards its net zero ambitions.
Producers outside the OPEC+ bloc (non-OPEC+) dominate medium-term capacity expansion plans, adding a total of 4.6 mb/d, or 76%, of the net increase. The United States alone accounts for 2.1 mb/d of the non-OPEC+ gains, while Brazil, Guyana, Canada and Argentina contribute a further 2.7 mb/d. As sanctioned expansions ease markedly towards the end of our forecast, growth will stall in the United States and Canada while Brazil and Guyana shift into decline based on current plans. However, should companies continue to sanction additional projects that are already on the drawing board, an incremental 1.3 mb/d of non-OPEC+ capacity could become operational by 2030.
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