IEA cuts oil demand growth forecasts

The International Energy Agency (IEA) said on Thursday that global oil demand growth has slowed significantly and is set for just 900,000 barrels per day (bpd) in 2024 due to a rapid slowdown in Chinese consumption. The agency cut its growth estimate by 70,000 bpd from last month’s assessment.

Global oil demand growth in the first half of 2024 was only 800,000 bpd year-on-year, the slowest pace of growth since 2020, according to the IEA. said in its closely watched Oil Market Report released today.

The main driver of the slow growth was “a rapid slowdown in China”, where oil consumption fell for a fourth straight month on an annual basis in July by 280,000 bpd, the Paris-based agency said.

The IEA now sees annual global demand rising to 900,000 bpd this year, compared with an increase of 2.1 million bpd in 2023. Demand growth for 2025 is seen at an equally subdued level of around 950,000 bpd.

Referring to China, the agency estimates that the country’s oil demand is now set to expand by just 180,000 bpd this year, “as the overall economic slowdown and an accelerated displacement of oil in favor of alternative fuels weigh on consumption.”

The picture is not rosy outside China either, the IEA says, noting that “outside China, oil demand growth is tepid at best.”

In its monthly report, the agency also reiterated its view of a global peak in oil demand by the end of the decade.

“With Chinese oil demand apparently drying up and only modest increases or decreases in most other countries, current trends reinforce our expectation that global demand will stabilize by the end of this decade,” the IEA said.

Earlier this week, OPEC also cut its oil demand growth forecast, citing concerns in China. In it Monthly Oil Market ReportOPEC expects global demand to grow by 2.03 million bpd in 2024, down from a previous estimate of 2.11 million bpd growth.

Chinese demand growth for 2024 was cut to 653,000 bpd from 700,000 bpd, and OPEC noted that “headwinds from the real estate sector and increasing penetration of LNG trucks and electric vehicles are likely to affect demand for diesel and gasoline in future”.

Despite a second consecutive downward revision to its demand growth estimate, OPEC is still far more bullish than the IEA on Chinese and global oil consumption growth this year.

By Tsvetana Paraskova for Oilprice.com

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