Increases in global oil demand are set to halve from 2.3 million barrels per day in 2023 to 1.2 million barrels per day this year, with the post-Covid recovery all but complete, GDP growth below trend in major economies, and as energy efficiency improvements and electrification of the vehicle fleet curb oil use.
That’s what the International Energy Agency (IEA) stated in its latest oil market report (OMR), which was released recently. In that report, the IEA noted that, over the course of 2023, the pace of demand growth outside of China slowed significantly, “to around 300,000 barrels per day on average during 2H23”.
“China will continue to lead oil demand growth in 2024, with its expanding petrochemical sector gaining an ever-larger share,” the IEA added.
In the OMR, the IEA said global oil supply is forecast to rise by 1.5 million barrels per day to “a new high of 103.5 million barrels per day in 2024”.
“The Americas – led by the United States, Brazil, Guyana and Canada – will dominate gains in 2024, just as the region did last year,” the IEA stated in the OMR.
“After a steep rise in output in 4Q23, global oil supply is expected to decline this month as a blast of cold weather sweeping through the United States and Canada takes a toll on oil operations,” it added.
“At the start of 2024, the risk of global oil supply disruptions from the Middle East conflict remains elevated, particularly for oil flows via the Red Sea and, crucially, the Suez Canal,” it continued.
The IEA highlighted in the OMR that, last year, around 10 percent of the world’s seaborne oil trade and eight percent of global LNG trade “passed through this major trade route”.
“The main alternative shipping route around Africa’s Cape of Good Hope extends voyages by up to two weeks – adding pressure on global supply chains and boosting freight and insurance costs,” the IEA warned in the OMR.
“As always, the IEA stands ready to respond decisively if there is a supply disruption and the global oil market requires additional barrels,” it added.
“IEA member countries collectively hold stocks of around four billion barrels, including 1.2 billion barrels of government-controlled stocks held exclusively in case of an emergency. That buffer should help assuage market jitters and angst among governments, industries, and energy consumers,” it went on to state.
In its latest short term energy outlook (STEO), which was released earlier this month, the U.S. Energy Information Administration (EIA) projected that total world consumption would grow 1.39 million barrels per day from 2023 to 2024 and come in at 102.46 million barrels per day this year. The January STEO put total world production 0.69 million barrels per day higher than last year in 2024, at 102.34 million barrels per day.
“We expect growth in global liquid fuels consumption will be lower over the next two years – forecast consumption grows by 1.4 million barrels per day (1.4 percent) in 2024 and by 1.2 million barrels per day (1.2 percent) in 2025,” the EIA said in its latest STEO”.
“Although growth in 2024 and 2025 is less than the 1.9 million barrel per day growth in 2023, it is largely consistent with the 1.2 percent average annual growth in global liquid fuels consumption over the 20 years from 2004–2023,” it added.
“We attribute the reduction in growth to slowing oil demand growth in China due to stalling GDP growth, increasing vehicle fleet efficiency, and an end to pandemic recovery-related growth in 2023,” it continued.
Despite lower oil demand growth, global consumption of liquid fuels still reaches a new record of over 103.5 million barrels per day in 2025, the EIA stated in the STEO.
“We forecast that global liquid fuels production growth also slows,” the EIA said in the report.
“Production rises by 0.6 million barrels per day in 2024, down from 1.7 million barrels per day of growth in 2023, as OPEC+ continues its policy of production restraint and U.S. tight oil production growth decelerates,” it added.
“In 2025, we forecast global liquid fuels production will rise by 1.6 million barrels per day, about 50 percent of which is rising OPEC+ crude oil production,” the EIA continued.
To contact the author, email [email protected]
Source link
#IEA #Increases #Oil #Demand #Set #Halve