The International Energy Agency (IEA) today projected a slowdown in oil demand growth next year, which was previously anticipated. The agency cited the overall economic weakness, slow recovery from the COVID-19 pandemic, and increasing use of electric vehicles as contributing factors.
In its monthly report for August, the agency forecasted a decrease in oil demand growth to one million barrels per day in 2024, a reduction of 150,000 barrels per day from its previous estimates.
The agency said that global economic projections continue to face challenges such as rising interest rates and reduced bank credit, which are pressuring companies already dealing with sluggish manufacturing and trade industries.
Supply shortages have driven oil prices higher, with Brent crude surpassing $88 per barrel yesterday, marking its highest level since January. The IEA warned that global inventories could sharply decline throughout the remainder of the current year, potentially leading to further price increases.
Global oil demand is expected to grow by 2.2 million barrels per day in 2023, driven by air travel during the summer, increased oil use for electricity generation, and rising petrochemical activity in China. These forecasts remain largely unchanged from the agency’s previous estimates.
The average demand for this year is expected to be 102.2 million barrels per day, with China accounting for over 70 percent of the growth. Despite concerns about China’s economic strength, it remains the world’s largest oil importer.
Demand reached a record level of 103 million barrels per day in June, and the IEA noted that August could witness a new peak.
The Organization of the Petroleum Exporting Countries (OPEC) anticipated an increase in oil demand by about 2.25 million barrels per day in 2024 compared to a growth of 2.44 million barrels per day in 2023.
Regarding supplies, production has notably slowed in recent months, largely due to voluntary production cuts by Saudi Arabia. OPEC and its allies, known as OPEC+, reduced supplies at the end of 2022 to support the market and extended these cuts until 2024 in June.
The International Energy Agency projected that if OPEC+ maintains its current targets, oil inventories could decrease by 2.2 million barrels per day in the third quarter and 1.2 million barrels per day in the fourth quarter of the year. This could potentially contribute to a new surge in prices.
Source: Qatar News Agency