Growth in global oil consumption could slow sharply over the next five years " pointing to a peak in demand" according to the latest annual oil report from the International Energy Agency (IEA), the world's largest oil producer.
Consumption
Over the next 5 years, the IEA expects a significant slowdown in global oil demand " as the energy transition progresses ". Based on current policies and market trends, this demand could grow by 6% between 2022 and 2028, reaching 105.7 million barrels per day (Mb/d) by that time, according to the Agency's forecasts.
This growth in oil demand is declining year on year: global consumption is expected to rise by 2.4 Mb/d in 2023 (compared with 2022), and by only 0.4 Mb/d in 2028 (compared with 2027). A " peak global oil demand in sight before the end of the decade "Fatih Birol, Executive Director of the IEA.
The IEA predicts a decline in oil consumption in the transport sector after 2026 (and after 2023 for gasoline), due in particular to the development of electric vehicles, but this should be offset by strong demand from the petrochemical industry (LPG, ethane and naphtha could account for more than half of the increase in global oil demand between 2022 and 2028).
Geographically, the IEA forecasts a decline in oil consumption between 2022 and 2028 in Europe (-0.6% per year over the period) and North America (-0.8% per year).
The Agency also unsurprisingly highlights the influence of oil prices on future demand (the central scenario assumes a price of $76 per barrel for North Sea crude over the entire period under consideration). In a "high price" scenario (+2.5% p.a.), world oil demand in 2028 could be reduced by 430,000 barrels per day compared with the IEA reference scenario. Conversely, falling oil prices could strongly boost consumption (+ 670,000 b/d in 2028 compared with the reference scenario).
Production
According to the IEA, the major oil producers " maintain their plans to increase production capacity even though demand growth is slowing down ". The main increases in production capacity envisaged between now and 2028 could come from the USA (+ 2.6 Mb/d between 2022 and 2028), and to a lesser extent from Brazil (+ 1.0 Mb/d) and Guyana (+ 0.9 Mb/d). Within OPEC+, capacity increases by Saudi Arabia, the United Arab Emirates and Iraq should help offset capacity cuts by other members of this highly influential producer group.
All in all, the IEA estimates that oil markets will have " a cushion of unused capacity of at least 3.8 Mb/d ».
The IEA points out that " as always "the company's forecasts, including for the medium term, are subject to many uncertainties. Among the " risks "Among other factors, the agency cites uncertain economic conditions, OPEC+ decisions and China's refining policy.
Among other things, the IEA points out that Saudi Arabia, the OPEC+ leader which recently announced further production cuts to boost oil prices, plans to increase its production capacity to 13 Mb/d by 2027, focusing on its giant oil fields.
