Global oil demand will peak at 105.6 million barrels per day (bpd) by 2029 and then fall slightly in 2030, the International Energy Agency said on Tuesday in its annual report. At the same time, global production capacity is forecast to rise by more than 5 million bpd to 114.7 million bpd by 2030.
The agency said this demand will keep growing until the end of the decade despite peaking in China in 2027, as cheaper gasoline and slower electric vehicle adoption in the United States support consumption. Despite seeing an earlier demand peak for China, the IEA stuck to its prediction that global oil demand will peak by 2029. This view contrasts with that of OPEC, which says consumption will keep growing for much longer.
Geopolitical risks, trade tensions cloud outlook
Heightened geopolitical risks, unresolved trade tensions and policy shifts have added several uncertainties to the oil market outlook. Since the start of the year, major economic forecasters have cut their outlooks for world GDP growth in 2025 by roughly half a percentage point to around 2.8 percent and see a below-trend pace of about 3 percent annually for the remainder of the decade, with knock-on implications for oil demand.
With conflicts in the Middle East region at risk of intensifying and trade negotiations ongoing, uncertainties surrounding IEA’s forecasts are substantial.
At the same time, a decision by the OPEC+ producer group, led by Saudi Arabia, to start unwinding oil production curbs in May 2025 is resetting oil supply trajectories over the 2024-30 forecast period. The anticipated output increase from OPEC+ and the impact of higher tariffs on trade pushed oil prices to four-year lows in April and early May. As a result, oil executives are recalibrating investment plans. However, oil prices have since rebounded after an exchange of air strikes between Israel and Iran started on June 13.
With geopolitical and economic uncertainties affecting oil producers and consumers alike, oil supply security remains high on the international energy policy agenda. Oil markets are going through a fundamental transformation as the drivers of global oil supply and demand patterns shift. Over the past decade, oil market dynamics have been defined by the parallel growth in U.S. oil supply and Chinese oil demand.
Demand to see small decline in 2030
Global oil demand is forecast to rise by 2.5 million bpd from 2024 to 2030, reaching a plateau around 105.5 million bpd by the end of the decade. However, annual growth slows from roughly 700 thousand bpd in 2025 and 2026 to just a trickle over the next several years, with a small decline expected in 2030, based on today’s policy settings and market trends.
“This is driven by below-trend economic growth, weighed down by global trade tensions and fiscal imbalances, and the accelerating substitution away from oil in the transport and power generation sectors,” added the IEA.
Despite some recent headwinds, global electric car sales have continued their remarkable growth trajectory. They exceeded 17 million in 2024 and are expected to surpass 20 million in 2025, representing around one-quarter of all cars sold, according to the IEA’s Global Electric Vehicle Outlook 2025.
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Emerging and developing economies to drive demand growth
Robust oil demand growth of 4.2 million bpd in emerging and developing economies over the 2024-30 period contrasts with a continued contraction in advanced economies. Asian markets dominate growth, with India’s expected 1 million bpd increase the largest of any single country by far, though rising oil use in Southeast Asian economies is also significant. By contrast, oil consumption among OECD countries is forecast to decline by 1.7 million bpd through 2030.
The report also revealed that upstream oil investment is set to fall by 6 percent to around $420 billion in 2025, with some of the largest declines in light tight oil in the United States. Investment in conventional projects – both existing and new – is expected to prove more resilient in 2025. Nonetheless, lower oil prices and higher production costs, due to tariffs and inflated costs for essential materials, could mean larger cuts to investment are still to come, while a return to durably higher prices could boost spending.
