International Energy Agency (IEA) said Thursday that the slowdown in oil demand growth over the past few years is due to the release of pent up demand after the pandemic.
In its November Oil Market Report, the IEA stated that the slowdown in growth in demand is also a reflection of global economic conditions and clean energy technology deployment.
According to a report, the world’s oil demand will grow by 920,000 barrels a day this year. By 2025 it is estimated to be just under 1 million barrels.
The Paris-based energy monitor largely left the estimates of demand growth unchanged since its previous report.
The agency stated that the growth in global oil demand this year was lower than last years 2 million barrels of daily increase. The growth was also lower than the average of 1.2 million barrels a day between 2000 and 2019.
IEA stated in its report:
China’s slowdown is the main factor affecting demand. Its growth in this year will be just a 10th of what it was in 2023, when the country grew by 1.4 mb/d.
China Demand Contracts
China’s economic problems have led to a drop in global oil consumption, as it is the world’s largest importer.
The IEA reported that Chinese demand declined for the sixth month in a row in September.
The agency reported that the average growth in oil demand in China for the third quarter 2024 was 270,00 barrels less per day than it had been a year before.
In contrast, the growth of oil demand in advanced economies reversed direction, increasing by 230 kb/d year-on-year in 3Q24.
The agency stated that the sub-1 million barrels a day growth rate for this year and next reflects the weakening of global economic conditions.
It said that “rapid deployment of clean energy technology is also increasingly replacing oil in transportation and power generation adding downward pressure on otherwise weak demand drivers.”
Global demand is rising
The IEA reported that oil supply increased by 290,000.00 barrels per day to 102.9 millions barrels a daily in October.
The lower supply from Kazakhstan and Iran was more than offset by the return of Libyan crude oil.
In 2024 and 2025, it is expected that nations outside the Organization of Petroleum Exporting Countries (OPEC) and its allies will increase their supply by 1.5 million barrels a day.
The agency has noted:
Brazil, which has been plagued by unplanned outages and underperformance in the operational area this year is expected to become a major growth source next year.
Brazil’s oil production is expected to increase by 210,000 barrels daily to 3.7 millions barrels per day in the next year. IEA stated that this is primarily because Brazil is expected to add over 800,000 barrels of new capacity per day.
The IEA stated that the growth of five American producers in 2024-2025 will be more than enough to meet demand growth.
In 2025, there will be a glut of supply
The IEA estimates that, even if OPEC maintains its production cuts, the global supply will be more than one million barrels a day higher next year.
OPEC+ has recently agreed to extend their voluntary production cuts of 2.2 millions barrels per day until the end of December.
The cartel planned to gradually increase output, starting modestly with 180,000 barrels per day in December.
The group changed its plans due to the low oil prices. Brent prices dropped to an all-time low of around $70 a barrel, a drop that lasted more than a week.
OPEC countries want the oil price to remain above $80 per barrel, as this is their break-even point.
Brent oil was trading at $72.89 a barrel on the Intercontinental Exchange, an increase of 0.8% over the previous close.
The post IEA Forecasts Oil Demand Growth Below 1 Million Barrels Per Day for 2024 and 2020 may be updated as new information becomes available
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