Oil demand growth is projected to continue rising, boosted by developing countries in Asia, said the International Energy Agency (IEA) in its Oil 2018 report.
The IEA’s annual five-year outlook of global oil demand, supply refining, and trade, projects no peak in sight, with oil demand expected to reach 104.7 mb/d by 2023, up 6.9 mb/d from 2017. However, the annual rate of oil demand growth is expected to slow to 1 mb/d by 2023 after expanding by 1.4 mb/d last year as countries take steps to replace oil with alternative energy sources.
China will be a key contributor to the oil slowdown. While the country will remain the main driver for oil demand growth, its new strict environmental policies on fuel efficiency and emissions will slow growth as it strives to control pollution. In this regard, China’s shift towards electric and natural gas vehicles will be especially significant as it looks to improve air quality in its cities.
Additionally, the IEA projects a global oil supply shortage after 2020 unless weak upstream investments catch up to oil supply demand. Although natural production declines are slowing, investment levels are also still recovering from the historic two-year drop-off in 2015 and 2016. The IEA cautions that this may lead to significant squeezing of the global spare capacity cushion by 2023.
“More investments will be needed to make up for declining oil fields – the world needs to replace 3 mb/d of declines each year, the equivalent of the North Sea – while also meeting robust demand growth.” Said Dr. Fatih Birol, the IEA’s Executive Director.
By: International Energy Agency