FILE PHOTO: Aerial view of the Gullfaks C oil platform, North Sea, August 23, 2023. REUTERS / Nora Buli / File Photo
FILE PHOTO: Aerial view of the Gullfaks C oil platform, North Sea, August 23, 2023. REUTERS / Nora Buli / File Photo
FILE PHOTO: Aerial view of the Gullfaks C oil platform, North Sea, August 23, 2023. REUTERS / Nora Buli / File Photo
FILE PHOTO: Aerial view of the Gullfaks C oil platform, North Sea, August 23, 2023. REUTERS / Nora Buli / File Photo

Global oil glut looms by end of the decade as non-Opec+ supply grows, says IEA


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By the end of the decade, the oil market's spare capacity is projected to reach levels previously seen only during the peak of the Covid-19 lockdowns in 2020, the International Energy Agency said on Wednesday.

Total supply capacity is expected to increase to nearly 114 million barrels per day by 2030, surpassing the projected global demand by 8 million barrels per day, the Paris-based agency said in a report.

Spare capacity at such levels could have “significant” consequences for oil markets, including for Opec members and the US shale industry, the report said.

“Oil companies may want to make sure their business strategies and plans are prepared for the changes taking place,” said IEA’s executive director Fatih Birol.

“As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts, growth in global oil demand is slowing down and set to reach its peak by 2030.”

Global oil demand is projected to be 3.2 million bpd higher in 2030 compared to last year, driven by increased oil consumption in emerging Asian economies, the report said.

The growth is particularly due to higher transport-related oil use in India and increased demand for jet fuel and petrochemical feedstocks, especially in China, the IEA added.

Meanwhile, oil consumption in advanced economies is expected to decline to 43 million bpd by 2030 – the lowest since 1991.

Producers outside of the Opec+ alliance are driving the expansion of global production capacity to meet anticipated demand of 106 million bpd by the end of the decade, making up three-quarters of the expected increase.

The US is set to contribute 2.1 million bpd to the non-Opec+ increase, with Argentina, Brazil, Canada, and Guyana adding an additional 2.7 million bpd, the report said.

“As the flow of approved projects fizzles out towards the end of this decade, capacity growth slows and then stalls among the leading non-Opec+ producers,” the IEA said.

“However, if companies continue to approve additional projects already on the drawing board, a further 1.3 million bpd of non-Opec+ capacity could become operational by 2030.”

Global refining capacity is on track to expand by 3.3 million bpd between 2023 and 2030, which is well below historical trends, according to the IEA.

However, this should be enough to meet the demand for refined oil products during this period, thanks to a simultaneous increase in the supply of non-refined fuels like biofuels and natural gas liquids (NGLs), the agency said.

“This raises the prospect of refinery closures towards the end of the outlook period, as well as a slowdown in capacity growth in Asia after 2027,” it added.

Based on current policies, strong demand from rapidly growing Asian economies, as well as from the aviation and petrochemicals industries, will increase oil consumption in the coming years, the IEA said.

However, these increases will be offset by rising electric car sales, improved fuel efficiency, reduced use of oil for electricity generation in the Middle East, and structural economic shifts.

Opec divergence

Opec and the IEA have been increasingly at odds regarding their differing assumptions concerning peak oil and scenarios for demand growth.

The IEA predicts that oil demand will reach its peak by 2030, whereas Opec does not foresee a peak and expects crude demand to continue increasing for the next two decades.

Last year, the group of oil-producing countries raised its long-term crude demand forecast to 116 million bpd by 2045, an increase of six million bpd from its previous estimate.

For this year, Opec has estimated oil demand growth of 2.2 million bpd, which is twice the IEA's projection of a 1.1 million bpd increase.

Some of Darwish's last words

"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008

His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.

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The world fair will run for six months from October 20, 2020 to April 10, 2021.

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Updated: June 12, 2024, 8:52 AM`