The total oil supply is predicted to rise to almost 114 million barrels a day by the next decade, 2030 which is 8 million barrels a day more than the estimated demand
The oil market is heading toward a glut, which will distort the supply and demand equation. With the oversupply of oil around the world the demand is expected to slow down in the coming years. The International Energy Agency has said, the producers continue to invest into new projects despite the transition to net zero.
The reason for the surging supplies and slowing demand growth for crude is due to lower emissions energy sources. The production combined with declining demand as consumers and businesses switch to electric vehicles and renewable energy, according to a new report from the International Energy Agency (IEA).
The attempts would be disrupted to manage the markets by OPEC+ and the dominated oil cartel, Middle East due to the unprecedented oversupply of oil by 2030. The total oil supply is predicted to rise to almost 114 million barrels a day by the next decade, 2030 which is 8 million barrels a day more than the estimated demand. The booming US shale industry who recently gained success and became the world’s leading oil producer may also face huge challenges.
According to the IEA’s new oil market outlook, the increased production attempts to ease market strains and push spare capacity to levels that are unseen outside of the COVID crisis. As per the IEA this kind of excess capacity was last seen during COVID when the economies were shut down all across the world to stop the spread of the virus.
The forecast of global demand in 2030 will still remain as high as 3.2 million barrels a day as per the agency. They also examine the effect of these dynamics for oil supply security, trade and investment. As per the latest policies and market trends, the increasing demand from the fast-growing economies of Asia, specially India and China including the aviation and petrochemical sectors are likely to drive up oil use.
OPEC+ forecasts their capacity to grow by 1.4 million barrels a day from 2023 until 2030 further led by Saudi Arabia, UAE and Iraq. The total oil market share fell down to its lowest ever since the alliance came together in 2016 to 48.5% this year.
The agency forecasts a cut in growth for global oil demand to 960,000 barrels per day from 1.1 million barrels a day, as weak deliveries in OECD countries have moved global demand in a narrow contraction in the month of March.
While those gains will increasingly be neutralized by factors like the growing sales of electric cars, decreasing oil usage for electricity production in the Middle East, fuel efficiency improvement in conventional cars and the structural economic shifts. As a consequence, the reports state a prediction that the demand for oil and biofuels averaged to just over 102 million barrels per day in 2023 will level off to nearly 106 million barrels per day by the end of this decade.
According to reports Brent crude sells for $82 per barrel while West Texas Intermediate is trading for $78 a barrel. Both productions saw an increase of roughly 3% as traders have appeared to be buying based on the decline in the oil prices following the announcement made by OPEC+ to unwind some of its production cuts.
It’s fairly possible that the oversupply of oil will lead to a “lower price environment”, said a report by IEA. Moreover the analysis includes three estimations as to where the prices will land in 2030. They are assumed to range from a high of more than $90 per barrel to a low of less than $60 per barrel in just six years. At the moment, a barrel of oil is trading for roughly $82.
The car owners are getting some relief as there is a drop in the gas prices across the world due to the weaker demand and lower prices. According to AAA, in the US, the average price for regular unleaded gas was $3.44 per gallon which is down by 9 cents from about a week ago and down by 14 cents from a year ago.