Global oil demand growth is losing momentum, the International Energy Agency (IEA) said on Thursday as it trimmed its 2024 growth forecast, in sharp contrast to the view held by producer group OPEC.
The IEA, which represents industrialised countries, has predicted that oil demand will peak by 2030 as the world shifts to cleaner energy. OPEC, meanwhile, expects oil use to keep rising for the next two decades.
Monthly reports this week from the two forecasters underlined their starkly different estimates for 2024 oil demand.
The IEA’s monthly report on Thursday said it expects global oil demand to grow by 1.22 million barrels per day (bpd) this year, slightly down from last month’s estimate. OPEC on Tuesday stuck to its much steeper growth forecast at 2.25 million bpd.
In the IEA’s view, the deceleration this year – about half of the growth in 2023 – is linked to a slowdown in Chinese consumption. The IEA had previously forecast 2024 demand growth of 1.24 million bpd.
“The expansive post-pandemic growth phase in global oil demand has largely run its course,” the IEA said, adding that a harsher global macroeconomic climate is also likely to constrain growth this year.
The Brent oil benchmark has risen about 6% so far this year as attacks on shipping in the Red Sea have raised supply fears, with January outages in major non-OPEC oil producing countries such as the United States adding to concerns alongside a fresh round of supply cuts by the wider OPEC+ group in the first quarter.
Gains, however, have been capped by worries over demand as major economies continue to grapple with high interest rates aimed at curbing sticky inflation.
Oil prices dipped on Thursday after publication of the IEA report, with Brent crude falling 0.6% towards $81 a barrel.
SUPPLY GROWTH
On the supply side, IEA raised its projection for 2024, estimating supply will grow by 1.7 million bpd versus its previous forecast of 1.5 million bpd.
The agency cited supply from producers outside OPEC+.
The IEA now expects supply to grow to a record high of about 103.8 million bpd, almost entirely driven by producers outside OPEC+, including the United States, Brazil and Guyana.
Given the robust outlook for supply outside OPEC+, the IEA expects a slight build in inventories in the first quarter, it said, adding that OPEC+ could be pumping above requirements if the extra voluntary cuts are unwound in the second quarter.
A new OPEC+ voluntary cut of 2.2 million bpd for the first quarter took effect last month.
OPEC+ crude oil output from all 22 member countries fell by 330,000 bpd to 41.52 million bpd in January, the IEA said, after protests shut in Libyan production and some of the bloc’s members deepened output cuts – though not by as much as pledged.
The IEA sees demand for OPEC+ crude plus inventories averaging 41.2 million bpd in the first quarter – less than January’s output – before rising to 41.5 million bpd in the second quarter.
