The International Energy Agency predicts that demand for fossil fuels will peak, and global energy prices will usher in a downward cycle

The Zhitong Finance App learned that the International Energy Agency predicts in its annual long-term report that with changes in global energy consumption patterns, we are entering an era where energy prices are lower. The report indicates that within this decade, global demand for fossil fuels will stop growing, while the supply of oil and liquefied natural gas will increase. Meanwhile, electricity consumption, particularly led by China, will continue to grow, driving the transformation of the global energy structure. International Energy Agency Director Fatih Birol emphasized that unless there is a major geopolitical conflict, we will usher in a period where energy prices face tremendous downward pressure.

This forecast marks a turning point, in stark contrast to the 2022 Russian-Ukrainian conflict where energy costs soared and triggered a wave of inflation. Despite the conflict in the Middle East, crude oil futures prices have fallen 20% from this year's high to less than $75 per barrel.

The International Energy Agency predicts that electricity usage has grown at twice the rate of total energy demand in the past ten years, and under the impetus of China, this growth rate will reach six times that of total energy demand in the next ten years. Electric vehicles are expected to account for 50% of global new vehicle sales by 2030, far higher than the current 20%.

Birol pointed out that we are rapidly entering the age of electricity, which is a major shift in energy history. Although demand for oil and gas will reach stable levels, supply is rising as oil production increases in the US, Brazil, Canada, and Guyana, as well as a “wave” of liquefied natural gas projects. By 2030, liquefied natural gas production capacity is expected to increase drastically to about 270 billion cubic meters, and there will even be an excess of clean energy technologies such as solar photovoltaics.

The report also mentioned that crude oil prices may continue to trade between $75 and $80 per barrel, but this will require OPEC and its allies to further limit production. Under Saudi Arabia's leadership, OPEC+'s idle production capacity has reached a record of around 6 million barrels per day, and is expected to reach 8 million barrels by 2030.

However, while the International Energy Agency's predictions seem increasingly accurate, some of its past predictions have not been accurate, such as expectations of tight supply a decade ago and predictions that oil production would plummet after the Russia-Ukraine conflict.

By 2030, more than half of the world's electricity will come from low-emission sources, the process of limiting climate change is progressing, and global carbon dioxide emissions are “about to peak,” but the report warns that the world is still not on track to achieve international environmental goals. By the end of this century, temperatures are expected to rise 2.4 degrees Celsius from pre-industrial levels, instead of 1.5 degrees Celsius as envisaged in the Paris Agreement.

Furthermore, this year's temperatures have reached record highs, with many extreme weather events, from deadly heatwaves in India to devastating floods in Africa and Europe, to wildfires in the Amazon rainforests of Greece and Brazil. The report warns that as emissions accumulate in the atmosphere, the costs of extreme weather are increasing, as are the costs of climate inaction.