Global oil markets will need to traverse myriad challenges in the medium-term as structural shifts reshape oil demand and trade flows, while rising oil supplies could potentially weigh on prices through the end of the decade.

Divergent regional economic trajectories and the accelerating deployment of clean and energy-saving technologies are combining to progressively slow the pace of oil demand growth, with a plateau emerging in the final years of our forecast, which runs to 2030. Emerging economies in Asia, particularly China and India, account for all of global demand growth. By contrast, oil demand in advanced economies falls sharply.

Rising world oil supplies, led by non‑OPEC+ producers, are expected to surpass forecast demand from 2025 onwards. Mirroring demand’s break with long-term trends, a front-loaded build in oil production capacity is forecast to lose momentum and swing into contraction towards the end of our medium-term outlook. A surge in natural gas liquids (NGLs) and condensates will account for 45% of new capacity increases over the forecast period. In a major shift in strategy, Saudi Arabia has put on hold its planned crude oil 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. The rise of petrochemicals as the main pillar of global demand growth largely tracks the substantial increase in global supply of NGLs, which are instrumental in their production.

At the same time, these changes will also create new challenges for refiners as demand for refined products is displaced by non-refined products such as NGLs and biofuels. Non-refined fuels are set to capture a staggering three-quarters of projected global demand growth over the 2023-2030 period. Moreover, refiners will need to reconfigure their product slates to meet divergent trends for distillates amid reduced consumption as the energy transition accelerates. This is especially the case in road transport fuels as EVs rapidly increase their market share.

Amid all these structural changes to supply and demand patterns, the global oil market outlook faces further uncertainties from weaker macroeconomic expectations, new government policies and regulations to fast-track the energy transition, and an unprecedented level of investment to scale up more efficient technologies.

While the challenges are formidable, the industry has consistently proved its adaptability to dramatic supply and demand changes, including from the energy crisis brought on by Russia’s invasion of Ukraine and the Covid-19 pandemic before that.

A ramping up of world oil production capacity, led by the United States and other producers in the Americas, is expected to outstrip demand growth over the 2023‑2030 forecast period and inflate the world’s spare capacity cushion to levels that are unprecedented, barring the Covid-19 period. Total supply capacity rises by 6 mb/d to nearly 113.8 mb/d by 2030, a staggering 8 mb/d above projected global demand of 105.4 mb/d. 

Such a massive cushion could upend the current OPEC+ market management strategy aimed at supporting prices. For now, the producer alliance has laid out a roadmap for unwinding extra voluntary cuts of up to 2.2 mb/d from Q4 2024 to Q3 2025. But this outlook is subject to their caveat that the production increases can be paused or reversed depending on market conditions.

A lower price environment would ultimately challenge the US shale industry, traditionally the fastest respondent to changing market circumstances. 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. 

Based on today’s market conditions and policies, global oil demand will level off at around 106 mb/d towards the end of the decade amid the accelerating transition to clean energy technologies. Surging EV sales and continued efficiency improvements of vehicles, and the substitution of oil with renewables or gas in the power sector, will significantly curb oil use in road transport and electricity generation.

Total oil demand is nevertheless forecast to rise by 3.2 mb/d between 2023 and 2030, supported by increased use of jet fuel and feedstocks from the booming petrochemical sector. Indeed, consumption of naphtha, liquified petroleum gas (LPG) and ethane will climb by 3.7 mb/d over the forecast period, fuelled also by growth in LPG use for clean cooking. 

Growth will be dominated by Asian economies, especially India and China, as oil demand’s pivot to emerging markets continues. Demand from the two Asian economic powerhouses will develop in very different ways, however. In China, growth is set to be driven by the petrochemical sector as rapid deployment of clean energy technologies and massive infrastructure investments in high‑speed rail blunt demand for transport fuels. In India, transport fuels will defy the global trend, rising sharply. Significant gains will also come from other emerging and developing economies in Asia. By contrast, demand in advanced economies will continue its decades-long decline, falling from 45.7 mb/d in 2023 to 42.7 mb/d by 2030. Apart from during the pandemic, the last time demand was this low was in 1991. Over that same time period, oil demand from emerging and developing economies will have increased by a factor of 2.5. 

In line with the ascendancy of petrochemicals as the anchor of global oil demand growth, 45% of the supply capacity increase over the forecast period comes from NGLs and condensates. While Saudi Arabia has shelved its planned crude capacity increase from 12 mb/d to 13 mb/d, its development of the massive Jafurah gas field will move ahead. This will result in a substantial ramping up of gas liquids output of almost 1 mb/d by 2030, volumes that are not subject to OPEC+ quotas. Strong gains in US NGLs are also expected. Total NGLs and condensates are projected to rise by 2.7 mb/d from 2023 to 2030. By comparison, crude oil production capacity is forecast to increase by 2.6 mb/d over the same period, while biofuels account for 620 kb/d of the 6 mb/d total.

Non-OPEC+ producers will continue to lead the capacity build, accounting for 4.6 mb/d, or 76% of the net increase. The United States alone makes up 2.1 mb/d of the non-OPEC+ gains, while Brazil, Guyana, Canada and Argentina contribute a further 2.7 mb/d. As the sanctioned project queue fizzles out towards the end of our forecast, growth stalls in the United States and Canada while Brazil and Guyana shift into decline based on current plans. However, should companies swiftly approve additional projects that are already on the drawing board, an incremental 1.3 mb/d of non‑OPEC+ capacity could become operational by 2030.

Saudi Arabia, the United Arab Emirates (UAE) and Iraq lead a 1.4 mb/d rise in OPEC+ oil capacity as African and Asian members post declines. The UAE and Iraq are raising crude oil capacity while Saudi Arabia is poised for a significant increase NGL and condensates supply. Capacity in Russia is expected to show only a marginal decline despite international sanctions as the giant Vostok project ramps up, helping to offset losses at mature oil fields.

The boost in supply follows a steady increase in upstream investments. Global upstream capital expenditures rose by 13% to an eight-year high of USD 538 billion in 2023 and are on track to increase by another 7% this year.

Global refining capacity is forecast to rise by 3.3 mb/d from 2023 to 2030, well below historical trends. Even with the moderate expansion in capacity, the increase outpaces the call on refined products over the period.

Refiners will need to progressively modify their product output to meet divergent trends for distillates as gasoline demand falls amid an increase in the market share of electric vehicles while jet fuel consumption rises. In addition, non-refined fuels such as NGLs and biofuels further undermine demand for refined product supplies and the need for additional refining capacity. Non-refined fuel products are set to capture more than 75% of projected demand growth over the 2023-2030 period.

This significant rise in non-refinery product supplies will add pressure on operating rates and refinery profitability, especially in mature demand centres. That raises the prospect of further capacity closures by the end of the decade. Capacity growth will remain concentrated in Asia, most notably in China and India, but post‑2027 there are signs of expansions slowing.  

Global oil trade will continue to be dictated by Asia’s growing structural shortfall in crude and product supply and the expanding surplus of crude, NGLs and products in the Atlantic Basin. Rising non-OPEC+ crude supply, in tandem with sanctions on Russian crude exports and OPEC+ voluntary cuts, will push higher volumes from the Atlantic Basin to East of Suez over the outlook period.

The loss of medium sour crudes from the Middle East amid OPEC+ cuts is partially offset by rising supplies from Brazil, Guyana and Canada. Asian markets have been opened in earnest to Canadian crude through the expanded Trans-Mountain pipeline to the Pacific Coast. Light sweet US crude oil will increasingly move to Europe and Africa as well as to India and other Asian refiners.

As the dominant centre of oil product demand growth, Asia will attract a greater share of product supply from the broader region, notably from the Middle East. Supplies from Russia, which are subject to sanctions in much of the Atlantic Basin, will continue to head eastward, although Africa and Latin America may also boost imports over time. Europe’s shortfall in diesel and jet fuel supply, plus North America’s need for jet fuel imports, will focus global competition most keenly in the middle distillate markets.