Global oil demand will peak by 2029 and begin to contract the following year while the U.S. and other non-OPEC countries add to supply, the International Energy Agency said on Wednesday, resulting in a major surplus this decade.
The IEA, which advises industrialised countries, moved forward the date for peak oil demand after having said in October that it would occur by 2030.
Its view contrasts with the outlook of oil producer group the Organization of the Petroleum Exporting Countries (OPEC), which sees demand rising long after 2029 in part due to a slower shift to cleaner fuels and has not predicted a peak.
Oil demand growth will plateau at 105.6 million barrels per day (bpd) by 2029, the Paris-based IEA said in an annual report, before contracting slightly in 2030 as electric car use rises, efficiency improves and power generation moves away from oil.
The IEA also sees supply capacity hitting nearly 114 million bpd by 2030, or a full 8 million bpd above projected demand, with non-OPEC+ producers led by the U.S. making up three-quarters of the capacity increase.
“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,” IEA Executive Director Fatih Birol said.
Demand growth will be driven mostly by emerging economies in Asia, especially by road transportation in India, as well as jet fuel and petrochemicals in China.
The projection of a supply glut will have wider reverberations, not least for OPEC nations that depend on oil for a major part of government income, the IEA said.
“Spare capacity at such levels could have significant consequences for oil markets – including for producer economies in OPEC and beyond, as well as for the U.S. shale industry.”
GAP WITH OPEC
In a separate report on Wednesday the IEA trimmed its oil demand growth forecast for 2024 by 100,000 bpd to 960,000 bpd, citing sluggish consumption in developed countries.
A muted economy and uptake of green energy should bring 1 million bpd growth next year, it added.
