"2030, Global Oil Surplus Expected" IEA Warns of Oversupply

The International Energy Agency (IEA) has issued a warning that the world will face an unprecedented oil supply surplus situation by 2030. While global oil production is surging under U.S. leadership, the expansion of electric vehicles and the acceleration of the clean energy transition are expected to reduce oil demand.

On the 12th (local time), the IEA released its mid-term report "Oil 2024," stating that oil demand will peak at 105.6 million barrels per day in 2029 and begin to decline from 2030. This peak demand timing is one year earlier than the March report had predicted for 2030. Meanwhile, oil production is expected to continue expanding, resulting in an estimated global supply surplus of about 8 million barrels per day by 2030.

The IEA said, "Except for when COVID-19 lockdowns were at their peak in 2020, an unprecedented level of massive supply surplus will be confirmed," adding, "Despite OPEC+'s market management efforts, falling oil prices could pose difficult challenges for oil-producing countries." The IEA had already warned last year that the peak in oil demand was approaching.

This situation will inevitably have a significant impact on the global crude oil industry. Fatih Birol, IEA Executive Director, stated, "OPEC+'s market management capabilities will be put to the test, and oil companies could suffer considerable damage," and reiterated, "This means that oil producers must now reconsider their business strategies and plans to adapt to these changes."

The reasons behind the IEA's forecast that oil demand will peak within a few years include the spread of electric vehicles, the expansion of alternative energy sources such as clean energy, and the slowdown in growth rates of major economies like China. Birol explained, "The clean energy transition is progressing," and "As China's economic structure changes, the global growth rate of oil demand is also slowing." The share of fossil fuels in the global energy supply has remained around 80% for decades but is expected to drop to 73% by 2030. Fossil fuels, including oil and coal, are also considered major causes of the climate crisis.

This demand slowdown is particularly pronounced in developed countries. Oil demand in developed countries is expected to decrease from 45.7 million barrels per day in 2023 to 42.7 million barrels per day in 2030, marking the lowest level since 1991. The Wall Street Journal (WSJ) analyzed, "Global oil demand in 2030 is estimated to increase by 3.2 million barrels per day compared to last year, but this is driven by demand from Asian economies, especially India and China." CNBC also reported, "Many countries are seeking momentum to move away from fossil fuels and support clean energy technologies," adding, "Oil demand in developed countries will further decline."

However, some opposition to the IEA's warning has been noted, mainly due to rapidly increasing energy demand in developing countries. Uncertainties surrounding the spread of electric vehicles and questions about follow-up measures related to climate crisis policies are also cited as background factors.

Meanwhile, the IEA has lowered its global oil demand growth forecast for this year from 1.1 million barrels per day to 960,000 barrels per day. It also expects that in 2025, due to economic recession and accelerated adoption of clean energy technologies, growth will continue below the trend at less than 1 million barrels per day.

On the day the report was released, the global benchmark Brent crude oil price traded around $82.6 per barrel. This is nearly $10 lower per barrel compared to the early April peak this year.