Authored by Michael Kern via OilPrice.com,
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The International Energy Agency forecasts global oil demand to peak and plateau by the end of this decade, with China’s demand peaking earlier than previously anticipated.
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While oil supply is expected to outpace demand growth, geopolitical risks and trade tensions introduce significant uncertainties to the oil market.
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There is a notable divergence in viewpoints between the IEA and OPEC regarding future oil demand, with OPEC predicting continued growth beyond the current decade.
A peak in global oil demand is still on the horizon, the International Energy Agency (IEA) said on Tuesday, doubling down on its forecast that demand will plateau by the end of the decade.
China’s oil demand, which increased by a cumulative 6 million barrels per day (bpd) in the decade to 2024, is set to peak earlier than previously expected, the agency said in its annual Oil 2025 report for the medium term.
While China – the world’s top crude oil importer – accounted for 60% of the global increase in oil consumption in 2015-2024, “the picture to 2030 looks very different,” the IEA said.
China’s demand is on track to peak in 2027 – two years earlier than previously thought – amid “an extraordinary surge in EV sales, the continued deployment of trucks running on liquefied natural gas (LNG), as well as strong growth in the country’s high-speed rail network, along with structural shifts in its economy.”
Global oil demand is forecast to rise by 2.5 million bpd from 2024 to 2030, reaching a plateau around 105.5 million bpd by the end of the decade, per the agency’s latest estimates.
Annual global growth will slow from about 700,000 bpd in 2025 and 2026 “to just a trickle over the next several years, with a small decline expected in 2030, based on today’s policy settings and market trends,” the IEA said.
The agency expects below-trend economic growth, weighed down by global trade tensions and fiscal imbalances, and accelerating substitution away from oil in the transport and power generation sectors.
At the same time, the increase in global oil supply is “set to far outpace demand growth in coming years,” according to the agency.
“Based on the fundamentals, oil markets look set to be well-supplied in the years ahead – but recent events sharply highlight the significant geopolitical risks to oil supply security,” IEA Executive Director Fatih Birol said.
If no major supply disruptions occur, the oil market will be comfortably supplied through 2030, the agency reckons, but warned that “significant uncertainties remain, especially given rising geopolitical risks and heightened trade tensions.”
The IEA’s “peak demand on the horizon” narrative once again clashes with OPEC’s view of growing oil demand at least into the 2040s.
Just last week, OPEC Secretary General, Haitham Al Ghais, said that oil demand would continue growing over the coming decades as the world’s population increases.
“Simply put, there is no ‘peak in oil demand’ on the horizon,” Al Ghais said at The Global Energy Show Canada in Calgary, Canada.
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