The International Energy Agency (IEA) was created a half century ago in response to geopolitical disruption in Middle East. As recent events show, the region remains critical to world oil markets. And oil remains critical for global economies. It is obvious to any observer that an escalation in the Israel/Iran conflict could upend oil and gas markets and send prices soaring, triggering massive damage to the global economy — in which case, all current oil market bets are off. However, if the conflict resolves without escalation, oil markets will largely return to business as usual.
The IEA’s latest attempt to predict the future, Oil 2025 – Analysis and Forecast to 2030, reinforces the agency’s consistent message that oil demand will peak by 2029, with China, the world’s second-biggest oil market, peaking in 2027. Electric vehicles (EVs), for example, are seen as a global success story, although heavily skewed toward centrally planned China.
One important problem with the credibility of IEA’s peak demand message is that history is regularly re-written and historical oil demand data is revised upward. For the future, the current headwinds for EVs in many markets, especially in the US, suggest that the displacement of gasoline and diesel might not be as great as predicted. This possibility and others point to the crucial question of the reality of IEA’s assumptions about future oil demand.
