Crude oil demand set to decline in 2030: IEA sees first drop since Covid, supply growth to be led by US and Saudi Arabia

Global oil demand will decline slightly in 2030 for the first time since the 2020 Covid shock, the International Energy Agency (IEA) said on Tuesday, as slower economic growth, electric vehicle adoption, and energy transition efforts reshape the market.In its annual Oil 2025 outlook, the Paris-based agency forecast that global oil consumption would peak at 105.6 million barrels per day (bpd) in 2029 before dipping to 105.5 million bpd the following year.The shift marks a dramatic change from the post-pandemic recovery, when demand surged after a 2020 collapse to 91.7 million bpd during lockdowns, AFP reported.“Annual demand growth will slow from around 700,000 bpd in 2025 and 2026 to just a trickle over the next several years,” the report stated, adding that major oil-consuming economies will reach peak usage before the end of the decade.The United States, the world’s largest oil consumer, is projected to see demand peak in 2025, followed by a decline starting in 2026. China, the top crude importer, is expected to follow suit with a decline beginning in 2028.Middle East demand will peak in 2027, then begin falling in 2028, with Saudi Arabia forecast to post the “single largest decline in oil demand for any country” in absolute terms. The drop comes as the kingdom accelerates efforts to replace oil-fired power generation with gas and renewables.Meanwhile, the IEA noted that recent oil price spikes — triggered by conflict between Israel and Iran — are not backed by market fundamentals.“We have a lot of supply in the market. Demand is much weaker than the supply,” IEA Executive Director Fatih Birol said, adding that the agency does not expect elevated prices to persist. The IEA, he said, is prepared to act if supply disruptions occur.Despite short-term risks, supply growth is expected to outpace demand through 2030. Global oil production capacity is projected to rise by 5.1 million bpd to 114.7 million bpd, nearly twice the growth rate of demand.Saudi Arabia and the United States together will account for 40% of that capacity increase, the agency said.