According to a recent report by the International Energy Agency (IEA), global oil demand may begin to decline within the next five years. By 2028, experts predict that demand growth will slow to less than half a percent per year, with global consumption reaching 105.7 million barrels per day (bpd) before steadily declining thereafter. Notably, demand for gasoline, the second-largest petroleum product in terms of consumption volume, could decrease as early as 2024, while overall demand for motor fuels (including diesel, aviation fuel, etc.) is expected to decline in three years. Approximately half of all demand growth will be accounted for by liquefied natural gas.
The International Energy Agency (IEA) has revised its consumption forecast for 2023, increasing expected oil consumption by 240,000 barrels per day (bpd) to 102.3 million bpd. However, such growth rates are not expected to continue. By 2024, the growth rate is expected to decline by a factor of three. Oil production this year is forecast to reach 101.3 million bpd, falling short of consumption by 1 million bpd. This deficit is likely to emerge in the coming months due to an increase in Chinese consumption, which is expected to account for approximately 60% of the growing demand this year, as well as the decision by OPEC+ to reduce production by 200,000 bpd. There could also be a supply deficit in 2024, especially in the latter half of the year.
At the end of last year, the IEA experts predicted that the 'oil peak’ would be reached in the mid-2030s. The main reasons for the revised forecast lie in the war in Ukraine and the resulting energy crisis. The significant surge in energy prices has greatly alarmed leading economies, spurring measures to accelerate the energy transition. According to the IEA, global investments in alternative energy development are estimated to reach around $2 trillion by the end of the decade. The reduction in demand growth will be driven by energy-saving technologies and the increased share of electric vehicles in the global economy. According to the IEA forecast, the main contributors to oil supply growth in the coming years will be the United States, Brazil, Guyana, and several other non-OPEC+ countries. By 2028, they are expected to increase production by 5.1 million bpd. In contrast, OPEC+ members, focused on supply restraint strategies, will only add 800,000 bpd to this volume.
Russia's role in the market will continue to diminish. According to the IEA’s monthly report, Russian oil production decreased by 150,000 bpd in May (reaching 9.45 million bpd), while exports declined by 260,000 bpd (falling to 7.8 million bpd). These figures are roughly in line with last year's numbers. Based on pre-war estimates by the IEA, Russia was expected to reach production levels of 11.3 million bpd by 2025; however, the new forecast predicts just 10.7 million bpd. This estimate takes into account a voluntary production cut of 500,000 bpd by the end of 2024. Experts warn that the reduction may be even greater. The main risks for the Russian oil industry lie in intensified pressure from sanctions, difficulties in securing financing amid global isolation, and the need to replace Western equipment with Chinese alternatives. It is likely that new projects aimed at expanding production, which were expected to replace depleted old fields, will now be put on hold. The future of projects in the Arctic, which are technologically complex and require significant investments, is also uncertain.