The International Energy Agency (IEA) published its June 2024 Oil Market Report on 12 June, presenting significant projections for the global oil industry. According to the report, global oil demand is forecasted to reach its peak by 2029 and subsequently decrease the following year. The IEA also foresees that oil supply capacity will surpass demand by a considerable margin by the end of the decade.
In 2023, global oil demand, including biofuels, averaged just over 102 million barrels per day (mbbl/d) and is anticipated to stabilize at around 106mbbl/d towards the conclusion of the decade. Nevertheless, global oil production capacity is projected to experience an upsurge, with the United States leading the charge. The report indicates that this rise in supply capacity is expected to outpace the growth in demand until 2030. By that year, the total supply capacity is estimated to reach nearly 114mbbl/d, which is 8mbbl/d more than the projected global demand.
Fatih Birol, the executive director of the IEA, stated, “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.” He additionally highlighted that the report’s forecasts, based on the most recent data, suggest a substantial supply surplus emerging in this decade, advising oil companies to prepare their business strategies and plans for the impending changes.
Furthermore, non-OPEC+ producers are expected to lead the growth in global production capacity, accounting for 75% of the anticipated expansion by 2030. The United States is anticipated to contribute 2.1mbbl/d to the non-OPEC+ production increase, with countries such as Argentina, Brazil, Canada, and Guyana projected to add another 2.7mbbl/d.
In addition, the IEA has indicated that OPEC+ intends to gradually decrease additional voluntary supply cuts of up to 2.2mbbl/d from Q4 2022 through Q3 2024. It has been assured that the increase in production can be halted or reversed depending on market conditions. The agency will revise its OPEC+ supply figures once this decision is finalized.
Looking ahead, global supply is predicted to rise by 1.8mbbl/d in 2025 as non-OPEC+ output increases by 1.5mbbl/d. The report also forecasts that global refining capacity is set to increase by 3.3mbbl/d between 2023 and 2030 to meet the demand for refined oil products, due to a simultaneous increase in the supply of non-refined fuels such as biofuels and natural gas liquids. However, this may lead to the closure of refineries towards the end of the outlook period and a deceleration in capacity expansion in Asia after 2027.
In summary, the insights provided by the IEA’s June 2024 Oil Market Report offer valuable information on the future trends and expectations for the global oil industry. It will be intriguing to observe how these projections unfold in the subsequent years and the implications they will have for the oil market on a global scale.