UBS Less Bearish Than IEA on Oil Outlook

The International Energy Agency (IEA) recently released a pessimistic forecast for the oil market, but UBS holds a more optimistic view regarding the supply and demand situation.

In its “Oil 2024” report, the IEA predicts that global oil demand will peak in 2029, starting to decline the following year. The agency anticipates that growing production capacity will lead to a considerable surplus, projecting spare global capacity could reach as much as 8 million barrels per day (b/d) by 2030, an increase from the current 6 million b/d. This surplus may exert downward pressure on prices throughout the remainder of the decade.

UBS shares a similar outlook on demand, forecasting it to peak around the same time, although their supply projections differ significantly. The IEA estimates supply capacity additions to total 6 million b/d from 2023 to 2030, outstripping demand growth of 3.2 million b/d during that period. In contrast, UBS predicts supply growth to be about 2.5 million b/d.

Additionally, the IEA is more bullish on production prospects for various countries, including the U.S., Canada, and Qatar, through 2030. UBS, however, suggests a more favorable supply/demand scenario, attributing this in part to lower anticipated non-OPEC+ supply and a reduced long-term oil price forecast of $75 per barrel by 2027, allowing OPEC+ to gradually increase production.

As of the latest trading data, oil prices were hovering around $82.08 a barrel, reflecting a 0.6% increase.