International Energy Agency: "Oil Demand Growth Will Stop by 2029"

Impact of Expanding Renewable Energy Transition and Electric Vehicle Adoption

The International Energy Agency (IEA) lowered its oil demand forecast for next year while raising its supply forecast. It also projected that oil will be in a state of oversupply by the late 2020s as major countries accelerate the adoption of renewable energy in response to the climate crisis.

In its monthly report released on the 11th (local time), the IEA revised down its 2025 oil demand growth forecast from 1 million barrels per day to 980,000 barrels per day. Accordingly, the total average daily demand for next year is expected to be 104 million barrels.

The reason the IEA lowered its oil demand forecast for next year is due to strengthened energy efficiency measures in the industrial sectors of OECD countries and the increase in electric vehicles, which is expected to cause a structural weakness in demand. The IEA added that despite major central banks recently starting to cut benchmark interest rates, economic growth remains sluggish.

However, this year's oil demand forecast was revised upward from 960,000 barrels per day to 970,000 barrels per day due to increased consumption in developing countries. The total average daily demand for this year is predicted to be 103.1 million barrels.

The average total daily oil supply for this year is estimated at 103 million barrels, and 104.8 million barrels for next year. These figures slightly exceed the IEA's previous estimates of 102.9 million barrels for this year and 104.7 million barrels for next year. The increase in oil supply is expected to be 1.5 million barrels per day this year and 1.8 million barrels per day next year.

However, the IEA explained that the supply forecast could change if some member oil-producing countries reduce their production cuts on their own, following last month's decision by the oil cartel OPEC+ (Organization of the Petroleum Exporting Countries Plus) to extend oil production cut measures for one year until September next year.

In its long-term oil outlook, the IEA predicted that global oil demand growth will stop by the late 2020s as countries cease fossil fuel use to avoid catastrophic climate change. Accordingly, there is an analysis that oil supply could be in an oversupply state.

However, caution is needed as the IEA's oil demand forecast differs significantly from OPEC's estimates. Bloomberg reported, "While many in the oil industry opposed the IEA's forecast, it received support from BP (British Petroleum)," which is regarded as a company actively pursuing a carbon-neutral transition strategy.

Meanwhile, on the same day, the price of West Texas Intermediate (WTI) crude oil for August delivery closed at $82.62 per barrel, up 0.63% from the previous trading day, and Brent crude for September delivery closed at $85.40 per barrel, up 0.38%.