Oil demand to keep growing to this decade, IEA says

London — Global oil demand will keep growing until around the end of this decade despite peaking in top importer China in 2027, as cheaper petrol and slower electric vehicle adoption in the US support consumption, the International Energy Agency (IEA) said on Tuesday.

The IEA, which advises industrialised countries, did not change its prediction that demand will peak by 2029, but sees China demand peaking earlier due to growth in electric vehicles.

Its view that global demand will peak in a few years sharply contrasts with that of producer group Opec which says consumption will keep growing and has not forecast a peak.

Oil demand will peak at 105.6-million barrels a day (bpd) by 2029 and then fall slightly in 2030, a table in the Paris-based IEA's annual report shows. At the same time, global production capacity is forecast to rise by more than 5-million bbl/day 114.7-million bbl/day by 2030.

Ample supplies

The conflict between Israel and Iran has highlighted the risk to Middle East supplies, helping send oil prices up 5% to above $74/bbl on Friday. Still, the latest forecasts suggest ample supplies through 2030 if there are no major disruptions, the IEA said.

“Based on the fundamentals, oil markets look set to be well-supplied in the years ahead,” IEA executive director Fatih Birol said in a statement. “But recent events sharply highlight the significant geopolitical risks to oil supply security.”

In a separate report on Tuesday, which included a commentary on the impact of the Israel-Iran conflict, the IEA said the world market looks well supplied this year in the absence of a major disruption as growth in supply exceeds that of demand.

World demand will rise by 720,000 bbl/day this year, it said, down 20,000 bbl/day from last month’s forecast. Supply will increase by 1.8-million bbl/day, up 200,000 bbl/day from last month, partly due to Opec+ increasing output.

China sputters

After decades of leading global oil demand growth, China’s contribution is sputtering as it faces economic challenges as well as making a big shift to EVs.

The world’s second-largest economy is set to see its oil consumption peak in 2027 after a surge in EV sales and the deployment of high-speed rail and trucks that use natural gas, the IEA said. In February, it predicted China’s demand for road and air transport fuels may have already peaked.

China’s total oil consumption in 2030 is now set to be only marginally higher than in 2024, the IEA said, compared with growth of about 1-million bbl/day forecast in last year’s report.

By contrast, lower petrol prices and slower EV adoption in the US, the world’s biggest oil consumer, have boosted the 2030 oil demand forecast by 1.1-million bbl/day compared to the previous prediction, the IEA said.

EVs are now expected to account for 20% of total US car sales in 2030, down from 55% assumed last year, according to the report.

Since returning to office, US President Donald Trump has demanded Opec lower oil prices and has taken aim at EVs through steps such as signing resolutions approved by legislators barring California's EV sales mandates.

Reuters