A looming glut in global oil supply could “upend” OPEC+ attempts to prop up prices by cutting production, according to the International Energy Agency (IEA).
The Paris-based IEA said Wednesday in a new report that growth in global oil production, led by the U.S. and other countries in the Americas, will “inflate the world’s spare (oil) capacity cushion” to levels seen only once before, during the coronavirus pandemic when oil prices crashed.
By 2030, global oil supply will outstrip demand by a “staggering” eight million barrels per day, according to the IEA’s medium-term oil market report. This surplus “could upend the current OPEC+ market management strategy aimed at supporting prices,” the agency said, warning of a “lower-price environment.”
The IEA also forecasts global oil demand growth to “slow progressively” over the rest of the decade, peaking by 2029 before contracting slightly the following year. Accelerating clean energy technologies, including “surging EV sales,” are major factors in the slowing demand.
OPEC+ has been restraining output for about two years to prevent a huge supply surplus that could depress prices and hurt its member states’ economies. Its production cuts amount to about 5.7% of global crude supply. Earlier this month, the group agreed to extend these reductions into 2025 but will gradually unwind some cuts starting October 1.