Paris- The International Energy Agency (IEA) has released its “Oil 2023 medium-term market report,” predicting a significant deceleration in global oil demand growth as the world approaches a peak in consumption. Factors contributing to this slowdown include high prices and concerns over oil supply security, which have accelerated the transition to cleaner energy technologies.
According to the findings outlined in the report, it anticipates an approximate growth of about 6% in global oil demands over six years. Stretching from 2022 through 2028. These estimates signal that the collective figure could hit as high as approximately 105.7 million barrels daily (mb/d). The petrochemical and aviation sectors will mainly drive the growth. Consumption is set to decline significantly over time, with 2.4 million barrels daily declining to.04 million barrels annually by 2028.
The report highlights the decline of oil usage in transport fuels beyond 2026 due to the expansion of electric vehicles, biofuel adoption, and improved fuel efficiency. IEA’s executive director, Fatih Birol, emphasized the accelerating momentum toward a clean energy economy, urging oil producers to adapt their investment decisions to ensure a smooth transition.
While global oil markets are still adjusting after the pandemic and geopolitical events, such as Russia’s invasion of Ukraine, disrupted them, the report suggests that market strains are expected to ease in the coming years. The ongoing global energy crisis resulting from the Ukrainian conflict has caused significant trade flow rearrangements. Although production cuts by the OPEC+ alliance may temporarily tighten global supplies, the report indicates an eventual easing of market pressures.
China, which rebounded in oil demand after lifting COVID-19 restrictions, is anticipated to experience slower growth from 2024 onwards. However, emerging and developing economies’ strong consumption and increasing petrochemical demand are expected to offset any contraction in advanced economies.
The report also highlights that global upstream investments in oil and gas are set to reach their highest levels since 2015, indicating an 11% year-on-year growth to $528 billion in 2023. While sustained investment at this level should meet the forecasted demand, the report cautions that it exceeds the amount compatible with achieving net-zero emissions.