IEA cuts global oil demand growth outlook

The Paris-based energy agency expects global oil demand to grow by 900,000 b/d, with total consumption expected to reach 103 million b/d in 2024, noting a decline of 70,000 b/d from its previous month’s projection.

PHOTO: Oil barrels. Getty Images

The International Energy Agency (IEA) sees oil demand growth to be about 950,000 b/d in 2025. This decline can be largely attributed to a slowdown in China’s economic growth.

In comparison to the growth of 2.1 million b/d seen last year, global oil demand this year is growing at a much slower rate, the IEA said. The “chief driver” of this slowdown is China’s sharply decelerating economy, where oil consumption contracted by 280,000 b/d year-on-year for the fourth consecutive month in July, IEA’s report stated.

This slowdown in demand growth has “fuelled a sharp sell-off” in the global oil market, the IEA said. Despite supply disruptions in Libya, Brent crude’s price has plunged to a “near three-year low” at around $70/bbl on 11 September due to the lacklustre demand growth scenario, the energy agency remarked.

“With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade,” the energy agency said.

Contrastingly, the oil producer group OPEC and the IEA have very different growth projections for this year and 2025. According to OPEC's latest report, global oil demand is projected to grow by a steeper 2.03 million b/d this year and 1.7 million b/d in 2025.

Supply forecast

Global oil supply gained 80,000 b/d in August to 103.5 million b/d, the IEA estimated. For the entire year, the agency expects global oil output to grow by 660,000 b/d, mainly driven by leading non-OPEC producers including the US, Brazil, Canada, and Guyana.

Oil supply outages in August were primarily caused by political disputes in Libya and maintenance work in Norway and Kazakhstan, the IEA said in its monthly Oil Market Report (OMR).

OPEC+ supply is projected to fall by 810,000 b/d this year, due to the group’s extension of supply cuts until December. The coalition’s decision to extend supply cut plans for two additional months is an “apparent effort to halt the precipitous slide in oil prices,” the IEA claimed.

Meanwhile, non-OPEC supply is projected to increase by 1.5 million b/d this year and next, the IEA remarked. “With non-OPEC+ supply rising faster than overall demand – barring a prolonged stand-off in Libya – OPEC+ may be staring at a substantial surplus,” the IEA added.

In 2025, global oil supply is forecast to gain 2.1 million b/d, about 200,000 b/d higher than the previous month’s projection.

By Aparupa Mazumder

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