Global oil demand to grow until end of decade, IEA expects

Global oil demand will continue to grow until the end of the decade, although it will peak in China in 2027. The International Energy Agency (IEA) said this today in its outlook to 2030. Cheaper gasoline and the slower adoption of electric vehicles in the United States will support oil consumption, it said.

The organization, which advises industrialized countries, has not changed its previous forecast that demand will peak this decade. Its outlook contrasts sharply with that of the Organization of the Petroleum Exporting Countries (OPEC), which says consumption will continue to rise and does not yet expect it to peak.

According to a table in the IEA report, oil demand will peak at 105.6 million barrels per day in 2029. It will then decline slightly in 2030. The agency also expects global production capacity to rise by more than five million barrels per day to 114.7 million barrels per day by 2030.

The current conflict between Israel and Iran has highlighted the risk to supplies from the Middle East. Last Friday, it helped push oil prices up five percent to above 74 dollars per barrel. Nevertheless, the latest forecasts suggest that supplies will be sufficient through 2030, provided there is no major disruption, the IEA said.

"Based on fundamentals, oil markets appear set to be well supplied in the coming years," IEA Executive Director Fatih Birol said.

"Recent events, however, are a stark reminder of the significant geopolitical risks to the security of oil supplies," he added.

China was the leading driver of global oil demand growth for decades. But its share is shrinking as the country faces economic difficulties while rapidly switching to electric vehicles. The world's second-largest economy will see oil consumption peak in 2027 due to a sharp increase in electric vehicle sales, the rollout of high-speed rail and the use of natural gas-powered trucks, the IEA said. In February, it forecast that demand for road and aviation fuels in China may already have peaked.

Total oil consumption in China is expected to be only slightly higher in 2030 than in 2024, the IEA said. Last year's report forecast growth of about one million barrels per day.