By Alexander Miller, consultant in energy markets – Eurasia Business News, June 21, 2024. Article n°1044.

The International Energy Agency (IEA), whose members include the world’s biggest oil consumers, predicted a “staggering” excess of 8 million barrels per day above projected global demand by 2030.

Global oil production capacity is expected to outpace demand growth between 2023 and 2030. By 2030, oil supply is anticipated to reach 114 million barrels a day, significantly exceeding demand.

Oil demand growth is expected to slow down and eventually hit a plateau, peaking in 2029.

The shift is attributed to three main factors: increasing adoption of electric vehicles, replacement of oil in electricity generation with renewables or natural gas, and predicted slowing of economic growth in China.

While overall demand will still rise slightly by 2030, North America and Europe are expected to see significant reductions in oil demand.

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The current increase in supply is primarily driven by producers in the Americas, particularly the United States. This oversupply could lead to a lower oil price environment, challenging both US shale producers and the OPEC+ bloc. This would put downward pressure on global oil prices, potentially ushering in an era of cheaper energy and easier economic growth. However, oil-exporting nations may face economic pressures due to reduced revenues.

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The surplus may force OPEC+ to reconsider its oil production strategy, with the group’s share of oil output potentially falling below 50% from 2030. This decline in market share is attributed to increased production from non-OPEC+ members such as Brazil, as well as the growing surplus in global oil production.

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The IEA urges governments and energy companies to adjust their policies and business plans to reflect these “new realities” of the markets. This decline in market share is attributed to increased production from non-OPEC+ members such as Brazil, as well as the growing surplus in global oil production.

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This forecast suggests a significant shift in the global oil landscape, with potential far-reaching implications for producers, consumers, and the broader energy transition.

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