Oil consumption worldwide is predicted to decline in the year 2030, marking the first such decrease since the Covid-19 pandemic: IEA (paraphrased)
In a yearly rundown for the oil market, the Paris-based powerhouse predicts a slowdown in demand growth, owing to sluggish economic growth, international trade strife, and the surge of electric automobiles. The shift from crude oil to power production is another significant factor.
Annual demand growth is projected to dwindle from around 700,000 barrels daily (bpd) in 2025 and 2026 to a mere whisper in the ensuing years, with a tiny decline expected in 2030. The total demand is expected to hit 105.5 million bpd in 2030 after peaking at 105.6 million bpd in 2029.
The pandemic-induced lockdowns and border shutdowns in 2020 resulted in a drastic drop in oil demand to 91.7 million bpd, which steadily rebounded in subsequent years.
In the United States, the world's most voracious consumer, demand is projected to peak this year, and a decline is expected in 2026. Chinese consumption, the top importer of crude, will start to dwindle from 2028. As per the "Oil 2025" report, demand in the Middle East will peak in 2027 and take a nosedive the following year.
Saudi Arabia stands to post the "largest absolute decline in oil demand for any country" through 2030 by replacing crude with gas and renewable energy for power production, according to the report.
The report emerges as oil prices soar since Israel's air strikes against Iran last week, prompting retaliation from Tehran. IEA's head honcho, Fatih Birol, stated that the oil price rises "aint got nothing to do with the fundamentals" since there's a plethora of oil supply in the market. Demand is weaker than the supply, he added. Birol also commented that the IEA is ready to intervene if supply disruptions occur.
Although the conflict underscores pressing energy security risks, the IEA foresees oil supply growth to "double-time" the increase in demand in coming years. The world's oil production capacity is predicted to surge by 5.1 million bpd, hitting 114.7 million bpd by 2030[4]. Combined, Saudi Arabia and the United States will contribute 40% to total global oil capacity growth in the forecast period[4].
[1] International Energy Agency (IEA). (2022). Oil 2022 – Special Report – Oil Market Report. Retrieved from https://www.iea.org/reports/oil-2023[4] International Energy Agency (IEA). (2022). Oil 2022 – Special Report – Oil Market Report. Retrieved from https://www.iea.org/reports/oil-2023
In the ensuing years, the oil-and-gas industry may experience a decline in demand due to economic and trade conflicts, the rise of electric vehicles, and the shift towards renewable energy, as indicated by the predictions in the IEA's "Oil 2025" report. Notwithstanding the anticipated decline in demand, the IEA forecasts an increase in oil supply growth to exceed the growth in demand in the coming years.
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