According to a report from Reuters, the International Energy Agency (IEA) stated that this year’s oil demand growth is expected to reach 1.3 million barrels per day (bpd), marking a decline of one million bpd compared to 2023. However, this forecast represents an increase of 110,000 bpd from the previous month’s estimate, attributed to supply delays caused by Houthi attacks in the Red Sea.
In its monthly oil report released on Thursday, the IEA suggested that accommodative signals from central banks could pave the way for an exit from economic stagnation. Nonetheless, the agency expressed apprehensions regarding weak economic indicators from China.
The IEA’s growth projection lags behind that of OPEC by nearly one million bpd, reflecting OPEC’s more optimistic outlook on the economy.
The agency highlighted that while shipping disruptions may temporarily bolster demand, the resolution of post-pandemic uncertainties and an uncertain economic landscape would exert downward pressure on demand.
The global economic deceleration, coupled with advancements in vehicle efficiencies and the proliferation of electric vehicle fleets, is viewed as further factors dampening oil consumption.
The IEA anticipates that demand growth will remain heavily skewed towards non-OECD countries, despite a gradual decline in China’s dominance. China’s oil demand growth is forecasted to decelerate from 1.7 million bpd in 2023 to 620,000 bpd in 2024.
Regarding OPEC+’s actions, the IEA suggested that if voluntary cuts are sustained until 2024, the market may veer towards a minor deficit rather than a surplus. Additionally, the agency observed that oil prices remained within a certain range in early March following the pricing in of OPEC+’s most recent cut announcement.
Concluding the report, the IEA noted that oil supply growth from non-OPEC+ nations is poised to outpace oil demand expansion significantly in the foreseeable future.
