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The International Energy Agency has revised down its forecast for oil demand growth this year, due to “persistent macroeconomic headwinds”, but it still expects global consumption to reach a record 102.1m bbl/day.
The Paris-based intergovernmental organisation estimated global oil demand would grow by 2.2m bbl/day in 2023, down from its forecast of 2.4m bbl/day a month ago, with China accounting for much of the growth.
“Buoyed by surging petrochemical use, China will account for 70% of global gains, while OECD consumption remains anaemic,” the IEA said in its latest monthly report, published on Thursday.
It forecast global oil demand growth to slow to 1.1m bbl/day in 2024, however.
“World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past twelve months,” the IEA said.
For OECD countries, and in Europe in particular, demand “is languishing amid a grinding slowdown in industrial activity”, the IEA said, noting that “ever-greater vehicle fleet electrification and efficiency measures” would also weigh on oil demand.
Nevertheless, the prospect of rising demand – led by China – has helped international Brent crude oil prices rise above USD 80/bbl for the first time in more than two months. The front-month contract for Brent crude North Sea oil was trading last up USD 0.22 on the day at USD 80.33/bbl.
World supply
The IEA forecast global oil supply to expand by 1.6m bbl/day this year to 101.5m bbl/day, then rise by 1.2m bbl/day next year to a new record of 102.8m bbl/day, with producing nations outside of the Opec+ alliance – such as the US and Canada – accounting for all of the increase.
“Lower production from Saudi Arabia and core Opec+ members since production cuts were first implemented last November has so far been offset by higher output from other producers,” the IEA said.
For instance, in June, oil supply from the US rose by 0.6m bbl/day “as natural gas liquids output surged to all-time highs while biofuels increased seasonally”.
“But”, the IEA warned, “global supply could tumble by more than 1m bbl/day this month as Riyadh implements steeper cuts. The Kingdom’s crude output is set to plunge to a two-year low of around 9m bbl/day in July and August, leaving it trailing behind Russia as the [Opec+] bloc’s top crude producer.”
