The world’s spare oil production capacity cushions are set to reach unprecedented levels, not counting Covid-19 period, because of a capacity ramp up in U.S. and other producers in the Americas, the International Energy Agency (IEA) says in its June Oil Market report.
The capacity increases will outstrip gains expected in consumption for 2023-2030. Total supply capacity is seen rising by 6 MMb/d to nearly 113.8 MMb/d by 2030, a staggering 8 MMb/d above projected global demand of 105.4 MMb/d. Such a massive cushion could upend the current OPEC+ market management strategy aimed at supporting prices.
This is coming at a time when demand growth worldwide is falling short of expectations and has led to stock builds, notably in the U.S. and China. This year, consumption is estimated to rise by 960 Mb/d, 100 Mb/d below last month’s forecast. At the same time, oil stocks added 19.3 MMbbl in April and 48.2 MMbbl in May. That demand weakness is seen extending into 2025 when growth gains are pegged at a subpar 1 MMb/d, held back by a muted economy and accelerating clean energy technology deployment.
