Global oil demand growth will almost halt in the coming years, peaking this decade, according to the International Energy Agency, with Chinese consumption slowing after an initial sluggish recovery.

“The shift to a clean energy economy is gaining momentum, with peak global oil demand in sight before the end of this decade as electric cars, energy efficiency and other technologies advance,” IEA Executive Director Fatih Birol said in a statement.

In its latest medium-term market report released on Wednesday, the agency forecast global oil demand under current market and policy conditions to grow 6% from 2022 to reach 105.7 million bpd in 2028, driven by the petrochemicals and aerospace sectors. .

However, annual demand growth will shrink from 2.4 million barrels per day this year to 400,000 barrels per day in 2028.

“The decline in advanced economies makes the global outlook even more dependent on China’s post-Covid pandemic reopening being able to sustain its initial momentum, which should eventually lift global trade and manufacturing,” the agency said, while also highlighting Beijing’s “hold-back”. consumption will peak in mid-2023 after recovering by 1.5 million bpd, but will lose momentum year-on-year to an average of 290,000 bpd between 2024 and 2028.

An “unprecedented realignment of global trade flows” and emergency releases from IEA members’ strategic oil reserves last year “allowed industrial stocks to recover and ease market tensions” amid rising demand, the World Energy Body said.

On the supply side, the IEA expects oil producers outside the influential coalition of the Organization of the Petroleum Exporting Countries and its allies — known as OPEC+ — to “dominate medium-term capacity expansion plans,” including U.S. and other U.S. producers. The IEA estimates global supply capacity will increase by 5.9 million bpd to 111 million bpd by 2028, with growth slowing due to the slowdown in the US. This will lead to a spare capacity reserve of 4.1 million barrels per day, targeting OPEC heavyweights Saudi Arabia and the UAE.

Russian output remains “cloudy” and the IEA predicts a decline due to sanctions on Moscow’s exports of oil and petroleum products since late last year, along with the exit of Western companies that facilitated production. The IEA now sees Russian supply likely to fall by a net 710,000 bpd over the six-year forecast period to 2028.

“Moscow’s ability to self-finance its operations in the oil industry and its access to Chinese equipment and services may avert a much steeper decline. But tightening Western financial measures imposed on Russia could also lead to a sharper downward trend,” the agency said. He estimates that 2.5 million barrels per day of Russian oil have been diverted from Western consumers to now find Asian buyers, creating a “two-tiered market”.