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.
Oilprice.com