The world is facing a substantial oil capacity glut by 2030, which could lead to lower prices and challenge OPEC+'s market control, according to the International Energy Agency (IEA)'s annual mid-term outlook, "Oil 2024." The IEA forecasts that global oil demand, including biofuels, will peak around 106 million barrels per day (b/d) towards the end of the decade, up from just over 102 million b/d in 2023. This is driven by increased adoption of electric vehicles, growth in renewable energy sources, and improved fuel efficiencies.
Despite the peaking demand, total oil demand is still projected to rise by 3.2 million b/d between 2023 and 2030, supported by an uptick in jet fuel consumption and demand from the petrochemical sector. However, oil supply capacity is expected to increase even more dramatically, reaching 113.8 million b/d by 2030—a 6 million b/d rise. This would result in a "staggering" surplus of 8 million b/d above the projected global demand of 105.4 million b/d, a level not seen since the demand collapse during the 2020 coronavirus pandemic.
This anticipated surplus could significantly disrupt current market management strategies by OPEC+, potentially ushering in a lower oil price environment. Such a scenario would pose considerable challenges for producers, including those in the U.S. shale industry and the OPEC+ bloc. Outside of OPEC+, capacity additions are expected to contribute 4.6 million b/d to the net increase, with Argentina, Brazil, Canada, and Guyana collectively adding 1.7 million b/d. The IEA emphasizes that oil companies should prepare for these significant market changes.
Further reports from the IEA indicate that oil markets are already oversupplied. In June 2024, the IEA maintained its forecast for peak oil demand by the end of the decade and warned of a major surplus. They noted that global observed oil inventories climbed by an average of 1 million b/d since February, with a massive 93 million barrels added in May alone. The IEA predicted that by 2026, world oil supply would exceed demand by almost 4 million b/d, representing the largest annual surplus ever seen. S&P Global Commodity Insights, however, offers a slightly different perspective, forecasting global oil demand to peak at around 109 million b/d in 2034 and only decline below 100 million b/d by 2050.
