Big Oil given stark warning as peak crude and a major supply surplus expected by 2030

The International Energy Agency said Wednesday that a U.S.-led surge in global oil production is expected to outstrip demand growth between now and the end of the decade, pushing spare capacity to unprecedented levels and potentially upending OPEC+ market management.

The forecast prompted a stern warning for Big Oil from IEA Executive Director Fatih Birol, who suggested the world's largest energy majors may wish to align their business strategies with the changes taking place.

In its latest medium-term market report, titled Oil 2024, the global energy watchdog said oil demand growth was on track to slow down before ultimately reaching its peak of near 106 million barrels per day by 2030. That's up from just over 102 million barrels per day in 2023.

At the same time, the IEA expects total oil production capacity to surge to nearly 114 million barrels per day by 2030 — a whopping 8 million barrels per day above projected global demand.

The IEA said this would result in levels of spare capacity not seen before — other than at the height of the Covid-19 lockdowns in 2020.

It warned that these dynamics could have "significant consequences" for oil markets, including for the U.S. shale industry and producer economies in OPEC and beyond.

"As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China's economy shifts, growth in global oil demand is slowing down and set to reach its peak by 2030," the IEA's Birol said in a statement.

"This report's projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place," he added.

The report comes as