 "crude oil")
A steady increase in the supply of crude oil is set to outpace global demand, resulting in a glut in the market by the end of this decade, the International Energy Agency (IEA) said on Wednesday.
India’s oil demand is expected to rise by 1.3 million barrels per day (bpd) by 2030, with its growth expected to be almost equal to that of China.
The total global supply capacity is set to rise by 6 million bpd to nearly 113.8 million bpd by 2030, a staggering 8 million bpd above the projected global demand of 105.4 million bpd, the agency said, in its new oil market outlook.
Oil 2024, the latest edition of IEA’s annual medium-term market report, examines the far-reaching implications of these dynamics for oil supply security, refining, trade, and investment.
"A ramping up of world oil production capacity, led by the United States and other producers in the Americas, is expected to outstrip demand growth over the 2023 to 2030 forecast period and inflate the world’s spare capacity cushion to levels that are unprecedented, barring the Covid-19 period," the IEA said.
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The growth in demand is expected to decelerate beginning in 2023 when it stood at 2.1 million bpd, IEA said. It added that the demand will plateau at 105.6 million bpd by 2029.
"This slow erosion in global demand growth results in a net increase of 3.2 million bpd during the 2023-2030 forecast period,” it said.
The total oil demand is nevertheless forecast to rise by 3.2 million b/d between 2023 and 2030, supported by increased use of jet fuel and feedstocks from the booming petrochemical sector.
The consumption of naphtha, liquified petroleum gas (LPG) and ethane will climb by 3.7 million bpd over the forecast period, fuelled by growth in LPG use for clean cooking.
Based on current market conditions and policies, IEA predicts global oil demand will level off at around 106 million bpd towards the end of the decade amid the accelerating transition to clean energy technologies.
Surging EV sales, continued efficiency improvements of vehicles, and the substitution of oil with renewables or gas in the power sector will curb oil use in road transport and electricity generation, it said.
A large part of the growth will be dominated by Asian economies, especially in India and China, as oil demand’s pivot to emerging markets continues before it potentially dips from 2027.
However, the demand from the two Asian economic powerhouses will develop in different ways, with transport fuels defying the global trend in India rising sharply.
India’s GDP growth will remain by far the strongest among major economies, averaging 6.5 per cent over the forecast period due to structural tailwinds such as benign demographics, a burgeoning middle- class, and accelerating urbanisation and industrialisation.
Meanwhile, the growth is set to be driven by the petrochemical sector in China as rapid deployment of clean energy technologies and massive infrastructure investments in high-speed rail blunt demand for transport fuels.
By contrast, demand in advanced economies will continue its decades-long decline, falling from 45.7 million bpd in 2023 to 42.7 million bpd by 2030, IEA said.
By 2030, the non-OECD share of total global GDP will climb to 59 per cent, up from 55 per cent in 2023.
