The International Energy Agency’s (EA) Oil 2024 report outlines a period
of significant transformation for the global oil market through to 2030.
While oil has historically fuelled economic growth. the report predicts a slowdown in demand growth, particularly in developed economies, as clean energy technologies and electric vehicles (EVs) gain traction.

This trend stands in stark contrast to the anticipated surge in ail production.
especially from non-OPEC+ countries, potentially leading to a substantial oil surplus by 2030.
Whe report suggests a global peak in oil demand by the end of the forecast period. driven by Two opposing regional trends. Emerging economies in Asia, particularly China and India, will experience continued growth in oil demand to supplet their expanding economies. In contrast, developed economies are expected to witness a steady decline in oil consumption as they transition tovares cleaner energy sourges ang emprace electric vehicles. This geographical disparity will reshape glopal oil trade fovs.
The anticipated rise in oil production capacity outpacing projected demand, could lead to a significant surplus of oil by 2030. This surplus has the potential to exert downward pressure on oil prices posing a chalenge for major producers. particularly the US shale industry, which is known for its rapid esporse to changing market conditions.

Eastward shift
The report noted that the centre of gravity for oil demand is migrating eastward, with Asia becoming a major mporter of crude oi, natural gas lougs NGLs, and refined products.
Emerging economies in Asia.particulary China and india. account for all of global demand
growth.By contrast.ordemnandinacvanced aconomee falla sharply said the reporty This
trend is fuelled by Asias burgeoning economic growth and riSing energy needs The Middle East and the Americas are expected to emerge as key suppliers, catering to this growing Asian certane, Ths eastward saft yil necessitate a reconfguration of global oft trade routes.

Added to this, the rise of NGLs and biofuels will disrupt the traditional landscape of refined products. A surge in natural gas liquids (NGLs) and condensates will account for 45% of new capacity increases over the forecast period, the report said. Refineries will be forced to adapt their production processes to accommodate this shift, potentially facing challenges as demand for some products wanes. For example, the report highlights a looming gasoline surplus as a consequence of increasing EV adoption and biofuel use. Conversely, the market for middle distillates like diesel is expected to remain tight, creating a product imbalance that refiners will need to navigate. Non-refined fuels are set to capture a staggering three-quarters of projected global demand growth over the 2023-2030 period,” the report said.
The report notes a major shift in strategy from Saudi Arabia, which has put on hold its planned crude dil capacity increase and will now focus on expanding natural gas liquids and condensates, which aligns with its efforts to boost domestic gas supply. “It may also reflect an acknowledgment of the rapidly building surplus in global crude oil production capacity, added the lEA.
As noted, a major challenge for the global oil market will be how the US shale industry reacts to a potential oil glut. This, in turn, could impact global oil supply and prices, creating a domino effect throughout the market. “How the industry will adapt and adjust to the new supply landscape will have wide-ranging consequences for producers and consumers globally through the remainder of the decade and peyondie lEA said.
Geopolitical considerations further complicate tie picture. The report acknowledges the ongoing influence of sanctions on Russian oil exports-which are pushing trade flows eastward
Asia’s thirst.

The surge in demana from Asia Cartcutary China anc incia, is poised to Gramatically reshape global product trade balances py 2039 The lEA report forecasts a rise in product exports from the Atlantic Basin, led by the US, to guench Asias growing torst.
The Middle East meanvnite sset t sauditi positiones the yards ung pted poduct
export kingpin. This dominance stems from a combination orfactorstinoreased retning activity and a regional decline in fuel oil demand. The surplus created oy these trends vill be readily absorbed by Asia’s import needs.

As noted. a major challenge for the global oil market will be how the US shale industry reacts to a potential oil glut. This, in turn, could impact global oil supply and prices, creating a domino effect throughout the market. “How the industry will adapt and adjust to the new supply landscape will have wide-ranging consequences for producers and consumers globally through the remainder of the decade and beyond, the lEA said.
Geopolitical considerations further complicate the picture. The report acknowledges the ongoing influence of sanctions on Russian oil exports, which are pushing trade flows eastward.
Asia’s thirst.
The surge in demand from Asia, particularly China and India, is poised to dramatically reshape global product trade balances by 2030. The lEA report forecasts a rise in product exports from the Atlantic Basin, led by the US, to quench Asia’s growing thirst.
The Middle East, meanwhile, is set to solidify its position as the world’s undisputed product export kingpin. This dominance stems from a combination of factors: increased refining activity and a regional decline in fuel oil demand. The surplus created by these trends will be readily absorbed by Asias import needs
Europe’s diesel demand is forecast to take a significant plunge. leading to a subsequent decline in net diesel imports. This creates an opportunity for North America to step in and fill the gap. potentially supplying the majority of Europe’s diesel needs by 2030.
Elsewhere. China is.on track to retain its crown as the world’s top refiner. However. the report highlights a potential challenge to Chinas product trade balance: its substantial need for petrochernical feedstocks such as LPG, ethane, and naphtha. This dependence is likely to keep.
China a net proquet impeter The potential for a gasoline glut may also prompt Chinese refineries to aust the rprecuction melas ta betenation with domestic demand for petrochemical feedstocks. This could lead to a risen naphtha and jet fuelylelds, potentially at the expense of gasoline ang ciese prectetion

By:International Shipping News / 02/07/2024.