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IEA predicts oil surplus this decade

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In this year’s report on the medium-term outlook for the crude oil market, the International Energy Agency (IEA) has forecasted that the markets will be oversupplied this decade.

This comes as crude oil production ramps up, while demand growth begins to slow due to the energy transition.

While the report does point to robust demand from fast-growing Asian economies in addition to the petrochemical and aviation sectors, it concludes that this will be mitigated by other developments. These include improved efficiency for conventional vehicles, the increasing adoption of electric vehicles, structural shifts in economies and less use of oil for power generation in the Middle East.

In parallel with this, the report predicts increasing capacity for crude oil production, such as in the US, where operators like ExxonMobil and Chevron, the makers of the Mobil and Texaco grease and lubricant ranges, continue to refine their shale oil production techniques.

The IEA predicts this will lead to a surplus of 8 million barrels per day.

Fatih Birol, the Executive Director of the IEA, said:

“As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts, growth in global oil demand is slowing down and is set to reach its peak by 2030. This year, we expect demand to rise by around 1 million barrels per day.”

He added that the projections in the report, which are based on up-to-date data, reflect the emergence of a significant supply surplus over this decade, something that he said oil companies may wish to incorporate into their business plans.

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