By The slowing of oil demand growth in recent years reflects the end of the post-pandemic release of pent-up demand, the International Energy Agency said on Thursday.
The slowdown in demand growth also reflects underlying global economic conditions, as well as clean energy technology deployment, IEA said in its November Oil Market Report.
World oil demand is expected to expand by 920,000 barrels per day this year and just shy of 1 million barrels per day in 2025, according to the report.
The Paris-based energy watchdog largely kept the estimates for demand growth unchanged from its last report.
The agency said that global oil demand growth this year is lower than last year’s 2 million barrels per day increase. It was also below the 1.2 million barrels per day average growth seen during 2000-2019.
IEA said in the report:
China’s marked slowdown has been the main drag on demand, with its growth this year expected to average just a tenth of the 1.4 mb/d increase in 2023.
China demand contracts
China’s economic struggles have dragged down global oil consumption as the country is the top importer of crude.
IEA said that Chinese demand contracted for the sixth consecutive month in September.
The average demand growth for oil in China during the third quarter of 2024 was 270,000 barrels per day lower than a year earlier, the agency said.
By contrast, oil demand growth in advanced economies reversed course, expanding by 230 kb/d y-o-y in 3Q24.
The agency said that its sub-1 million barrels per day growth pace for this year and the next reflects weakening global economic conditions.
“Rapid deployment of clean energy technologies is also increasingly displacing oil in transport and power generation, adding downward pressure to otherwise weak demand drivers,” it said.
Global supply rising
Oil supply rose by 290,000 barrels per day in October to 102.9 million barrels a day, the IEA said.
The return of Libyan oil to the market more than offset lower supplies from Kazakhstan and Iran.
Meanwhile, nations outside the Organization of the Petroleum Exporting Countries and allies are expected to boost supplies by 1.5 million barrels per day in both 2024 and 2025.
The agency noted:
Plagued by a number of unscheduled outages and operational underperformance this year, Brazil is expected to be a major source of growth next year.
Brazil is expected to boost production of oil by 210,000 barrels a day to 3.7 million barrels per day next year. This is mainly because the country is expected to add more than 800,000 barrels per day of new capacity, IEA said.
“Total growth from the five American producers will more than cover expected demand growth in 2024 and 2025,” IEA said.
Supply glut in 2025
The IEA believes that even if OPEC keeps its production cuts in place, global supply will exceed demand by more than 1 million barrels per day next year.
OPEC+ recently agreed to extend its voluntary production cuts of 2.2 million barrels per day till the end of December.
The cartel had planned to raise output gradually starting with a modest 180,000 barrels a day in December.
However, weak oil prices prompted the group to change its plans. Brent prices fell to a more than a month low to around $70 per barrel.
OPEC countries mostly want oil prices to stay above $80 per barrel, which is the breakeven range for them.
At the time of writing, the price of Brent on Intercontinental Exchange was $72.89 per barrel, up 0.8% from the previous close.
The post IEA forecasts oil demand growth below 1 million barrels per day for 2024 and 2025 appeared first on Invezz
