With intensifying geopolitical strains and heightened uncertainty about global economic prospects, oil markets are undergoing structural changes as the key drivers of supply and demand growth of the past 15 years start to fade, according to International Energy Agency’s medium-term outlook.

China – which has driven the growth in global oil demand for well over a decade – is set to see its consumption peak in 2027, following a surge in electric vehicle sales and the continued deployment of high-speed rail and trucks running on natural gas. At the same time, US oil supply is now expected to grow at a slower pace as companies scale back spending and focus on capital discipline – although the United States remains the single largest contributor to non-OPEC supply growth in the coming years.

In this context, global oil demand is forecast to increase by 2.5 million barrels per day (mb/d) between 2024 and 2030, reaching a plateau of around 105.5 mb/d by the end of the decade. At the same time, global oil production capacity is forecast to rise by more than 5 mb/d to 114.7 mb/d by 2030.

This growth is set to be dominated by robust gains in natural gas liquids (NGLs) and other non-crude liquids. The strategic shift towards higher non-crude capacity is driven by strong global demand for petrochemical feedstocks and the development of liquid‑rich gas resources.

The OPEC+ alliance has started to unwind production cuts, reshuffling oil supply trajectories. However, the report finds that increased output from the United States, Canada, Brazil, Guyana and Argentina is set to be more than sufficient to cover the growth in global demand in the coming years. In the absence of major supply disruptions, the latest medium-term forecast sees a comfortably supplied oil market through 2030 – though significant uncertainties remain, especially given rising geopolitical risks and heightened trade tensions.

“When we look at oil market trends over the past decade, we see a remarkable double act – thanks to the shale revolution, the United States has accounted for 90% of oil supply growth worldwide, while 60% of the rise in global demand has come from China. But these dynamics are shifting,” said IEA Executive Director Fatih Birol. 

“Based on the fundamentals, oil markets look set to be well-supplied in the years ahead – but recent events sharply highlight the significant geopolitical risks to oil supply security. When it comes to energy security, there is no room for complacency. The IEA remains deeply committed to working with energy producers and consumers to safeguard energy security,” Birol added.

According to the report, accelerating sales of electric cars – which reached a record 17 million in 2024 and are on course to surpass 20 million in 2025 – have kept a peak in global oil demand on the horizon. Based on the current outlook, electric vehicles are set to displace a total of 5.4 mb/d of global oil demand by the end of the decade. The replacement of oil with natural gas and renewables for power generation in the Middle East, particularly in Saudi Arabia, is also expected to weigh on global oil demand growth in the coming years.

With the petrochemical industry now poised to become the dominant source of oil demand growth from 2026 onwards, the report finds the industry is on track to consume one in every six barrels of oil by 2030. Demand for oil from combustible fossil fuels – which excludes petrochemical feedstocks and biofuels – may now peak as early as 2027 even as the consumption of jet fuel continues to grow.

Since petrochemicals are mostly produced from non-refined products such as NGLs, these trends are set to increasingly impact the refining sector. The report sees net refinery capacity far exceeding demand for refined products in 2030, which is likely to result in more capacity shutting down in the interim.