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IEA Projects Decline in Global Oil Demand by 2028

By Moses Patience Chat

The International Energy Agency (IEA) has projected a decline in the growth of global demand  for oil  due to high prices and security of supply concerns caused by  global energy crisis which has hastened the shift towards cleaner energy technologies. 

This was disclosed in the Agency’s Medium-Term Market Report which was released on Wednesday. According to the report,  based on current government policies and market trends, global oil demand will rise by 6% between 2022 and 2028 to reach 105.7 million barrels per day and will be  supported by a robust demand from the petrochemical and aviation sectors.

It added that “despite this cumulative increase, annual demand growth is expected to collapse from 2.4 mb/d this year to just 0.4 mb/d in 2028, putting a peak in demand in sight.

The Executive Director of IEA, Fatih Birol, said that “the shift to a clean energy economy is picking up pace, with a peak in global oil demand in sight before the end of this decade as electric vehicles, energy efficiency, and other technologies advance adding that oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition.

The report’s projections advises major oil producers to maintain their plans to build up capacity even as demand growth slows. This is expected to result in a spare capacity cushion of at least 3.8 mb/d, concentrated in the Middle East.

 However, the report highlighted several factors that could affect market balances over the medium term including uncertain global economic trends, the direction of OPEC+ decisions, and China’s refining industry policy.

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