Tuesday, November 5, 2024

World faces ‘staggering’ excess of oil by end of decade, warns IEA

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If the projections prove correct, they would have significant geopolitical ramifications. A glut of oil would significantly diminish the power of Middle Eastern producers, who have for decades held sway over prices through the Opec cartel.

The Saudi Arabia-led coalition has already seen its power diminish in recent years as US shale producers have ramped up supply.

Fatih Birol, the IEA’s executive director, said: “We expect that beyond 2024 oil demand growth will continue to slow down and before 2030 will hit a plateau and peak.”

He said the increased adoption of electric cars was one of three “key drivers” of the shift.

Mr Birol said: “We expect more than one out of five cars sold in the world will [soon] be an electric car and indications we are getting from the market confirms this number may be even slightly higher… Electric cars are becoming cost competitive to the internal combustion engine.”

He added: “The second driver comes from electricity generation. Today, the Middle East and some North African countries use significant amounts of oil to generate electricity – about 1.5 million barrels per day. 

“That is driven mainly by Saudi Arabia. Iraq, Kuwait and others. And we know that there are strong plans in place to replace the oil used for electricity generation by renewables or natural gas.”

Mr Birol said the slowdown in oil demand from China was also crucial, linked to a predicted slowing of economic growth from 6pc a year to 4pc.

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