Oil 2023 (Analysis & forecast to 2028) Medium-term Market Report

July 18, 2023

The collaboration between the International Energy Agency (IEA) and the Petroleum Planning and Analysis Cell (PPAC) has resulted in the launch of the IEA Oil 2023 medium-term market report. This report, titled “IEA Oil 2023 – Supply and demand dynamics to 2028,” sheds light on the evolving landscape of global oil demand and supply. By examining the projected trends and key factors influencing the industry, the report provides valuable insights for policymakers and stakeholders.

The Shift Towards Cleaner Energy Technologies

According to the report, global oil demand is expected to witness a slowdown, nearly halting by 2028. This deceleration is primarily attributed to the accelerated adoption of cleaner energy technologies, driven by energy security concerns. As the world embraces sustainable alternatives, the demand growth for oil is projected to decline significantly.

Robust Demand from Petrochemical and Aviation Sectors

Despite the overall slowdown, the petrochemical and aviation sectors are expected to contribute to robust oil demand. These sectors, driven by industrial and transportation needs, continue to rely on oil for their operations. However, their growth alone is not sufficient to offset the declining demand in other areas.

Decline in Oil Demand for Transport

The report highlights that the decline in oil consumption for transport is anticipated after 2026. Factors such as the expansion of electric vehicles, the growth of biofuels, and improving fuel economy are leading to a reduction in oil dependency within the transportation sector. This shift indicates a changing landscape in the way people commute and transport goods.

Continued Growth in Oil Demand from China and India

Despite the global slowdown, the report suggests that countries like China and India will continue to register growth in oil demand. These nations, experiencing economic expansion and increasing urbanization, are expected to sustain their need for oil to support their growing populations and industries.

Biofuels as an Alternative

Biofuels are projected to play a significant role in the future energy mix. The report indicates that biofuels will contribute to 10% of new liquid fuel supply growth by 2028. With Brazil, Indonesia, and India leading the way, the expansion of biofuels production offers a sustainable and cleaner alternative to traditional fossil fuels.

Increased Global Supply Capacity

The report reveals that oil-producing countries outside the OPEC+ alliance, including the United States, Brazil, and Guyana, dominate plans for increasing global supply capacity in the medium term. These nations are expected to drive an estimated rise of 5.1 million barrels per day (mb/d) by 2028. However, it is worth noting that this level of investment, while meeting the forecasted demand, exceeds the requirements for a world moving towards net-zero emissions.

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