The International Energy Agency (IEA) released its 2023 Mid term Oil Market Report on June 14, stating that high oil prices and supply security caused by global energy tensions are accelerating the world's transition to clean energy. In the coming years, the growth rate of global oil demand will significantly slow down, but overall oil consumption will be supported by strong demand for petrochemical products.
The report suggests that based on current government policies and market trends, global oil demand will grow by 6% between 2022 and 2028, reaching 105.7 million barrels per day. But the annual demand increment will decrease, expected to decrease from 2.4 million barrels per day this year to 400000 barrels per day in 2028. Especially with the development of electric vehicles, the increasing use of biofuels, and the improvement of fuel efficiency, the amount of petroleum used as transportation fuel will decrease after 2026. The petrochemical industry will continue to be a key driver of global oil demand growth, with liquefied petroleum gas, ethane, and naphtha accounting for over 50% of the growth from 2022 to 2028. During the forecast period, the aviation industry will experience a strong recovery, with a significant increase of 2 million barrels per day in demand for jet fuel.
In terms of supply, global upstream investment in oil and gas will increase by 11% year-on-year in 2023, reaching $528 billion, the highest level since 2015. Although the increase in expenditure is partly due to rising costs, if this level of investment continues, it will be sufficient to meet the demand growth during the forecast period. Oil producing countries outside of OPEC+will lead the increase in global supply capacity during the forecast period. It is expected that by 2028, the United States, Brazil, and Guyana will collectively increase their oil supply by 5.1 million barrels per day. Saudi Arabia, the United Arab Emirates, and Iraq are leading the internal capacity construction of OPEC+, while African and Asian countries will face the dilemma of continuous decline in production. According to the report, the slowdown in global oil demand growth, coupled with plans from major oil producing countries to expand production capacity, is expected to result in at least 3.8 million barrels per day of idle capacity, mainly concentrated in the Middle East region.