The world faces a “staggering” surplus of oil equating to millions of barrels a day by the end of the decade, as oil companies increase production the International Energy Agency has warned.
While demand is forecast to peak before 2030, continued investment by oil producers, led by the US, would by then result in more than 8 million barrels per day of spare capacity.
This “massive cushion” of extra oil could “upend” the efforts of Opec+ to manage the market and usher in an era of lower prices.
Global capital spending on oil and fields rose to $538bn in 2023, the highest level since 2019 in real terms. The increase in investment was largely driven by state oil companies in the Middle East, which increased their spending to twice the levels seen 10 years ago, and China.
Haitham Al Ghais, Opec general secretary, has described the IEA forecasts as “dangerous”, and warned of “energy chaos on a potentially unprecedented scale” if producers stopped investing in new oil and gas.
The future drivers of growth would include more aviation and the “booming petrochemical sector”, Birol said. The IEA also expects petrol use to increase in India as more drivers hit the roads.