According to a new report by the International Energy Agency (IEA), by the end of this century, due to increased production and the shift of consumers and businesses towards electric vehicles and renewable energy sources, it is expected that oil demand will decline, leading to a potential global oil surplus.
CBS News reported that on Wednesday (June 12), the International Energy Agency stated that by 2030, the total global oil supply is expected to increase to about 114 million barrels per day, resulting in a staggering overhang of 8 million barrels of oil per day. The IEA also added that the additional production capacity could have “significant impacts on the oil market,” with OPEC members such as the United States, Saudi Arabia, and Kuwait being affected.
Executive Director of the International Energy Agency, Fatih Birol, pointed out, “According to the latest data forecasts, this decade may see a significant surplus in oil supply, and oil companies need to be prepared for this.”
One of the reasons for the oil surplus is that consumers in developed countries are likely to continue shifting towards purchasing electric vehicles. The IEA predicts that by 2030, global electric vehicle sales could reach 40 million units, with nearly half of new vehicles expected to be electric cars.
According to the IEA report, an oil surplus could lead to a drop in gasoline prices. This analysis predicts three scenarios for oil prices in 2030, ranging from over $90 per barrel to below $60 per barrel. Currently, the price of oil trading is around $82 per barrel.
However, some experts suggest that the report should not be overly interpreted. Patrick De Haan, petroleum analysis director at GasBuddy, a company tracking gas station prices, told CBS, “The (surplus) is a long-term trend, and the timing of when it might happen could still be far off or could come sooner. I am more concerned about the slowdown in electric vehicle consumption and the high costs of countries pushing for car electrification.”
He added that by 2030, gasoline may not necessarily become cheaper either. This is because some refineries in the United States and Europe have already shut down, and countries are less likely to have plans for setting up new refineries due to policy shifts towards solar, wind, and other renewable energy sources.
“From this perspective, the future direction of oil prices is difficult to predict. We still need refineries at the moment; it’s a transitional period from petrochemical fuels to renewable energy, and if refineries close during this time, gasoline prices could rise in the long run.”
In the short term, drivers may breathe a sigh of relief as gas prices are dropping nationwide due to weak demand and falling oil prices. According to data from the American Automobile Association (AAA), on Monday, the average price of regular unleaded gasoline in the United States was $3.44 per gallon, a decrease of about 9 cents from a week ago and 14 cents from a year ago.