A new report from the International Energy Agency is predicting a glut in oil reserves by 2030, with the industry’s major producers on track to pump 8 million more barrels per day than industry will consume.
“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,” the IEA’s director, Fatih Birol, said in a statement. “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.”
Image Credit: International Energy Agency
The IEA is pegging its predictions of demand disintegration to the projected growth of electric vehicles, greater fuel efficiency in combustion engines, and a shift away from oil for electricity generation in the Middle East.
Demand for oil still will increase, with the global energy monitor predicting demand will level off at 106 million barrels per day, up from the 102 million barrels per day produced in 2023. The problem for producers is planned capacity increases in North and South America which could bring supply capacity up to 114 million barrels per day by 2030.
While demand from Chinese chemical and aviation companies and the Indian commercial and personal transportation sector will contribute to demand growth, the agency predicts that it won’t be enough to stave off the continuation of a decades-long decline in oil demand from advanced economies.
These economies consumed 46 million barrels per day in 2023 and the IEA expects that figue to drop to less than 43 million barrels per day by 2030.
Critics claim that these figures from the IEA may be too bullish — and, indeed, many countries with previously high rates of adoption of electric vehicles have seen adoption stall. In the U.S., which is responsible for a good percentage of the estimates of rising production capacity, Congressional leadership has questioned the agency’s leadership about what they see as advocacy for renewable energy rather than clear-eyed analysis of global energy policy.
For the agency, the messaging on peak oil has been clear for some time, and joins a chorus of other recent energy analysts predicting renewable power has become the lowest cost and fastest growing source of power for a host of mobility and industrial applications.
Image Credit: International Energy Agency