The International Energy Agency (IEA) forecasts that global oil demand will continue growing until it peaks at 105.6 million barrels per day (bpd) by 2029, despite an earlier-than-expected peak in China. A key factor supporting demand growth is slower electric vehicle (EV) adoption in the U.S. and more affordable gasoline, which are offsetting the downward pull from China’s energy transition.
Accelerating sales of electric cars – which reached 17 million in 2024 and are on course to surpass 20 million in 2025 – have kept a peak in global oil demand on the horizon. Based on the current outlook, electric vehicles are set to displace a total of 5.4 mb/d of global oil demand by the end of the decade.
The replacement of oil with natural gas and renewables for power generation in the Middle East, particularly in Saudi Arabia, is also expected to weigh on global oil demand growth in the coming years, IEA said.
While China, the world’s largest oil importer, is projected to reach peak demand by 2027, its total consumption in 2030 will only be marginally higher than 2024 levels. The shift is largely due to widespread EV adoption, expanding high-speed rail networks, and increased use of natural gas trucks. The IEA notes that road and aviation fuel use in China may have already plateaued.
In contrast, the U.S. oil demand outlook has been revised upward by 1.1 million bpd for 2030. EV adoption in the U.S. is slowing, with electric vehicles expected to make up just 20 percent of car sales by 2030, down significantly from last year’s 55 percent forecast. This is attributed to policy changes under the Trump administration, including the rollback of California’s EV sales mandates.
On the supply side, global oil production capacity is projected to rise to 114.7 million bpd by 2030, ensuring ample supply assuming no major disruptions. For 2025, oil supply is expected to grow by 1.8 million bpd, outpacing demand growth of just 720,000 bpd, according to the IEA.
However, geopolitical risks remain a key variable. The Israel-Iran conflict recently caused oil prices to spike above $74 per barrel, reminding markets of the fragile balance in Middle East oil flows. The IEA underscores that although fundamentals point to a well-supplied market, geopolitical volatility could quickly alter the landscape.
In terms of spending, the trend toward long-term investments in production capacity and strategic diversification remains robust, particularly in non-OPEC countries and U.S. shale. Meanwhile, OPEC+ is gradually increasing output, though its longer-term outlook diverges sharply from the IEA’s – the producer group anticipates continued growth in demand well beyond 2030.
In summary, the IEA expects a soft peak in global oil demand by 2029, driven by structural shifts in China and counterbalanced by slower transitions in markets like the U.S. The coming years will be shaped by a delicate interplay of technology, policy, prices, and geopolitics in determining the pace of change in both demand and spending.
GreentechLead.com News Desk