The International Energy Agency (IEA) announced on Tuesday that global oil demand is projected to continue increasing until approximately 2030.
Demand growth is anticipated even with China, the leading oil importer, expected to reach its peak demand in 2027.
The IEA attributes this sustained consumption to factors such as lower gasoline prices and a slower rate of electric vehicle adoption in the United States.
The IEA, an advisory body for industrialised nations, maintains its forecast for a demand peak by 2029. However, it anticipates an earlier peak in China’s demand, primarily driven by the increasing adoption of electric vehicles.
The Organization of the Petroleum Exporting Countries (OPEC) predicts continued growth in consumption and has not forecast a peak in global demand. This stands in sharp contrast to the view that global demand will peak in just a few years.
Demand growth
The IEA’s annual report, released in Paris, forecasts that global oil demand will reach its highest point at 105.6 million barrels per day by 2029, followed by a slight decline in 2030.
Concurrently, global production capacity is projected to increase by over 5 million barrels daily, reaching 114.7 million barrels per day by 2030.
Global electric car sales have maintained their impressive growth, even in the face of recent challenges.
By the close of the decade, global oil demand is projected to see a displacement of 5.4 million barrels per day due to the rise of electric vehicles, as indicated by IEA’s analysis.
“As the transport and power generation sectors continue to diversify towards other fuels, the petrochemical industry is set to become the dominant source of global oil demand growth from 2026 onwards,” the Paris-based energy watchdog said.
The expansion of petrochemical capacity is predominantly led by China and the US, in contrast to Europe and other Asian economies.
By 2030, the global production of polymers and synthetic fibers is projected to demand 18.4 million barrels of oil per day, accounting for over one-sixth of the world’s oil consumption, the agency said.
Source: IEA
Adequate supply
Oil prices rose 5% to over $74 a barrel on Friday due to concerns about Middle East supplies stemming from the conflict between Israel and Iran.
Despite this, the IEA’s most recent projections indicate that there will be sufficient supplies through 2030, assuming no significant disruptions.
“In the absence of a major disruption, oil markets in 2025 look well supplied,” IEA said in a separate report on Tuesday.
The IEA’s June Oil Market Report indicated a well-supplied global market for the current year. The report, which also addressed the market impact of the Israel-Iran conflict, stated that supply growth is outpacing demand growth, assuming no major disruptions.
The IEA projects a 720,000 barrels per day increase in global demand this year, a slight decrease of 20,000 barrels a day from its previous month’s forecast.
Concurrently, supply is expected to rise by 1.8 million barrels a day, an upward revision of 200,000 barrels per day from last month, partly attributed to increased output from OPEC+.
Source: IEA
Global observed oil inventories have increased by an average of 1 million barrels a day since February, with a substantial 93 million barrels rise in May alone, based on preliminary data, IEA said. This surge is attributed to supply surpassing demand.
But while the market looks comfortably supplied now, the recent events sharply highlight the significant geopolitical risks to oil supply security.
China’s demand
China’s decades-long dominance in global oil demand growth is faltering. This slowdown is attributed to economic headwinds and a significant pivot towards electric vehicles (EVs).
China’s total oil consumption in 2030 is now set to be only marginally higher than in 2024, compared with growth of around 1 million barrels a day forecast previously, the IEA said.
IEA said:
By contrast, lower gasoline prices and a loss of momentum in EV adoption in the United States, the world’s largest oil consumer, have led to an increase in forecast oil demand of 1.1 mb/d by 2030 compared with last year’s report.
The report indicated a revised projection for US electric vehicle sales, now anticipating them to constitute 20% of total American car sales by 2030, a significant decrease from the 55% estimated last year.
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