IEA sees OPEC holding back 8 million b/d by 2030, squeezing market share

OPEC's market share could fall to 8 million b/d below its combined output capacity by 2030, according to the International Energy Agency, underscoring the Saudi-led group’s challenge to defend prices amid shrinking consumption and high production among its rivals.

The IEA, which largely represents Western oil-consuming economies, has long been at odds with OPEC over the future of the industry, with the Paris-based organization predicting peak oil by 2030 and OPEC insisting demand will rise through 2050.

Nevertheless, the IEA’s 2024 World Energy Outlook, released Oct. 16, offers a sobering analysis for the swing producer, as it looks to retain market share in the coming decades while keeping prices high enough for its members to balance their budgets.

In the IEA’s “stated policies scenario” -- effectively the current trajectory -- rising non-OPEC production will see OPEC’s market share fall from the current 34% to 31.6% in 2028 -- levels not seen since the 1980s -- before recovering to 40% in 2050. High production in the Americas, including in the US, Canada, Brazil and Guyana, is among OPEC’s biggest threats. By 2050, global output will have fallen around 10% to 90.3 million b/d, the IEA said.

In an alternative scenario in which greater efforts are made to reach net-zero goals, the IEA said global output in 2050 could be just 52.1 million b/d, of which OPEC would account for just 21.36 million b/d.

With a “significant overhang of supply” in this decade putting petrostates “in a bind,” the IEA said OPEC’s spare capacity will rise from 6 million b/d in 2024 to 8 million b/d in 2030, given planned capacity additions by OPEC members, at which point it will have a 33% market share.

In January, Saudi Aramco said it would cancel plans to boost its oil production capacity by 1 million b/d to 13 million b/d.

The IEA predicts oil output to fall by 2050, and expects the total investment required to keep the market stable will be 20% lower in 2035 than in 2024.

OPEC says oil phase-out a 'fantasy'

OPEC has made a habit of rejecting outright the IEA's bearish forecasts. In its own 2024 World Oil Outlook, released Sept. 24, OPEC sees oil demand rising by some 18 million b/d to 120.1 million b/d in 2050, driven by demand in India, other Asian economies, the Middle East and Africa.

OPEC Secretary General Haitham al-Ghais went a step further, claiming the “fantasy” of phasing out oil and natural gas endangers global energy security by discouraging vital investments, with $17.4 trillion worth of projects required to meet demand through 2050.

One delegate, speaking on condition of anonymity, insisted Oct. 16 that oil would not peak by 2050, adding that OPEC's view differs from the IEA's primarily because the group expects demand to surge in non-OECD countries.

The organization did not respond to requests for comment.

But while OPEC remains more bullish than its peers, the bloc has repeatedly cut its demand growth forecasts for 2025 in recent months. Additionally, recent actions also reflect a more cautious approach; in September, OPEC and its Russia-led allies delayed plans to slowly reintroduce 2.2 million b/d of voluntary cuts to the market by two months, fearing a price crash.

Platts assessments of Dated Brent from S&P Global Commodity Insights almost dropped below $70/b in early September amid high output in non-OPEC+ countries, quota busting by key members including Iraq and Kazakhstan, weak Chinese demand and high interest rates around the world.

In recent weeks, prices have been supported by escalating hostilities between Israel and Iran, pushing Dated Brent to $81.20/b on Oct. 7, but the benchmark fell to $73.53/b on Oct. 15 following reports that Israel had ruled out strikes on Iranian oil installations.

Ongoing price weakness, despite 5.8 million b/d of OPEC+ production being held offline, has fueled speculation that Saudi Arabia could start pursuing market share over price strength.

The IEA’s World Energy Outlook sees Middle Eastern and South American production rising through 2050 but expects output from North America, Europe and Africa to decline alongside falling Chinese demand.

Equally concerning for OPEC are potential disruptions to the Strait of Hormuz, a vital regional chokepoint through which 20% of global oil and LNG passes daily, including 4.4 million b/d of oil bound for Chinese refineries, according to the IEA.

Any disruption “could lead to supply shortages and price volatility,” the IEA said, because the “vast majority of OPEC spare capacity” would be blocked if ongoing conflict in the Middle East causes it to close.