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Oil prices rise despite warnings of a "major surplus" this decade

Published 12/06/2024, 09:18
Updated 12/06/2024, 09:40
© Reuters.  Oil prices rise despite warnings of a "major surplus" this decade
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Proactive Investors - Oil prices have rallied this morning despite the International Energy Agency's warning that the world will face a "major surplus" of the commodity by the end of the 2030s.

Slowing demand caused by the transition to greener energy and an uptick in production are expected to cause a rise in oil supplies, the IEA said.

Brent crude prices shrugged off the warning, with the price per barrel rising by 0.6% to US$82.40, while West Texas Intermediate enjoyed a gain of 0.8% to US$78.52.

Global oil production is expected to outgrow demand before 2030, with countries like the US and those in the Americas set to drive the surge in supplies.

"As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts, growth in global oil demand is slowing down and set to reach its peak by 2030," said Fatih Birol, executive director at the IEA.

"This year, we expect demand to rise by around one million barrels per day.

"This report’s projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place."

Both Shell (LON:SHEL) and BP (LON:BP) also showed resilience in the face of the warning, with both companies' shares rising by a little under 1% today.

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