An oil pumpjack is shown near Colon Petroleum in Monahans, Texas on March 27, 2024.
Brandon Bell | Getty Images News | Good pictures
A U.S.-led surge in global oil production is expected to outpace demand growth between now and the end of the decade, pushing spare capacity to unprecedented levels and improving OPEC+ market governance, the International Energy Agency said on Wednesday.
The forecast prompted a stark warning for Big Oil from IEA Executive Director Fatih Birol, who suggested the world’s biggest energy majors may want to align their business strategies with the changes taking place.
In its latest medium-term market report titled Oil 2024, the global energy watchdog said oil demand growth will slow before peaking at 106 million barrels per day by 2030. That’s up from just 102 million barrels per day in 2023.
At the same time, the IEA expects total oil production capacity to rise to nearly 114 million barrels per day by 2030 – 8 million barrels per day more than projected global demand.
The IEA said this would result in levels of spare capacity not seen before – except for the peak of Covid-19 lockdowns in 2020.
It warned that these dynamics could have “significant consequences” for oil markets, including the US shale industry and producer economies in OPEC and beyond.
“As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy changes, global oil demand growth slows and will peak by 2030,” the IEA’s Prole said in a statement.
“The report’s projections, based on recent data, show a large supply surplus emerging this decade, oil companies may want to ensure their business strategies and plans are prepared for the changes that occur,” he added.
The report comes as countries seek to move away from fossil fuels, building momentum behind clean and energy-saving technologies. Burning of fossil fuels like coal, oil and gas A key driver of the climate crisis.
According to the IEA, the share of fossil fuels in global energy supply has been around 80% for decades. It expects This will decrease to 73% by 2030.
Despite the slowdown in crude oil demand growth, crude demand is still expected to be 3.2 million barrels per day higher in 2030 than in 2023, in the absence of strong policy actions or behavioral changes.
It said the growth was largely driven by fast-growing economies in Asia and strong demand from the aviation and petrochemical sectors.
However, among advanced economies, it says oil demand will fall below 43 million barrels per day in 2030, down from 46 million barrels per day last year. Barring the coronavirus pandemic, oil demand from advanced economies was last lower in 1991, the IEA said.
In a major 2021 report, the IEA urged against new oil, gas or coal development if the world is to reach net zero by 2050.
The report’s findings have been widely criticized by many OPEC+ producers, who advocate dual investment in hydrocarbons and renewables until green energy unilaterally meets global consumption needs.
Led by Saudi Arabia, OPEC+ refers to the influential energy alliance consisting of OPEC and non-OPEC partners.
