The IEA did not change its prediction that oil demand will peak by 2029, but says China's demand will peak earlier due to growth in electric vehicles.Mario Tama/Getty Images
Global oil demand will keep growing until around the end of this decade despite peaking in top importer China in 2027, as cheaper gasoline and slower electric vehicle adoption in the United States support consumption, the International Energy Agency said on Tuesday.
Despite seeing an earlier demand peak for China, the IEA, which advises industrialized countries, stuck to its prediction that global demand will peak by 2029. This view sharply contrasts with that of producer group OPEC, which says consumption will keep growing for much longer.
Its view that global demand will peak in a few years sharply contrasts with that of producer group the Organization of the Petroleum Exporting Countries (OPEC) which says consumption will keep growing and has not forecast a peak.
Oil demand will peak at 105.6 million barrels per day by 2029 and then fall slightly in 2030, a table in the Paris-based IEA’s annual report shows. At the same time, global production capacity is forecast to rise by more than five million barrels per day to 114.7 million barrels per day by 2030.
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A conflict between Israel and Iran has highlighted the risk to Middle East supplies, helping send oil prices up 5 per cent to above US$74 a barrel on Friday. Still, the latest forecasts suggest ample supplies through 2030 if there are no major disruptions, the IEA said.
“Based on the fundamentals, oil markets look set to be well supplied in the years ahead,” said IEA executive director Fatih Birol in a statement. “But recent events sharply highlight the significant geopolitical risks to oil supply security,” Birol said.
In a separate report on Tuesday, which included a commentary on the market impact of the Israel-Iran conflict, the IEA said the world market looks well supplied this year in the absence of a major disruption as growth in supply exceeds that of demand.
Global supply in 2025 will rise by 1.8 million barrels per day, up 200,000 bpd from last month, the IEA said. This is partly because OPEC+, which groups the Organization of the Petroleum Exporting Countries plus Russia and other allies, is raising output.
World demand in 2025 will rise by a much lower 720,000 barrels per day, the IEA said, down 20,000 barrels per day from last month’s forecast.
Employees on a factory production line for Chinese electric vehicle maker Nio in Hefei, China, in April. The country is forecast to see its oil consumption peak in 2027 after a surge in EV sales.Florence Lo/Reuters
After decades of leading global oil demand growth, China’s contribution is sputtering as it faces economic challenges as well as making a big shift to EVs.
The world’s second-largest economy is set to see its oil consumption peak in 2027, following a surge in EV sales and the deployment of high-speed rail and trucks running on natural gas, the IEA said. In February, it predicted China’s demand for road and air transport fuels may have already peaked.
China’s total oil consumption in 2030 is now set to be only marginally higher than in 2024, the IEA said, compared with growth of around one million barrels per day forecast in last year’s report.
By contrast, lower gasoline prices and slower EV adoption in the United States, the world’s largest oil consumer, have boosted the 2030 oil demand forecast by 1.1 million barrels per day compared to the previous prediction, the IEA said.
U.S. electric vehicles are now expected to account for 20 per cent of U.S. total car sales in 2030, down from 55 per cent assumed last year, the report said.
Since returning to office, U.S. President Donald Trump has demanded OPEC lower oil prices and has taken aim at EVs through steps such as signing resolutions approved by lawmakers barring California’s EV sales mandates.