IEA cuts 2024 oil demand forecast on ‘deteriorating’ global economy

The oil market will remain on 'tenterhooks' as the Israel-Gaza war unfolds, agency says

An oil rig off the coast of Great Yarmouth, UK. PA

The International Energy Agency slashed its oil demand growth forecast for next year, citing a “deteriorating economic climate”, which will weigh on crude consumption.

Global oil demand is now expected to expand by nearly 900,000 barrels per day next year, down from the agency’s previous forecast of a growth of 1 million bpd, the IEA said in its monthly oil market report on Thursday.

However, the agency raised its 2023 demand forecast to 2.3 million bpd, from a previous estimate of 2.2 million bpd, citing “buoyant” demand growth in China, India and Brazil.

China, the world’s second-largest economy and top crude importer, will account for 77 per cent of the demand this year, the IEA said.

“A sharp escalation in geopolitical risk in the Middle East, a region accounting for more than one-third of the world’s seaborne oil trade, has markets on edge,” the agency said.

“Prices have since stabilised … while there has been no direct impact on physical supply, markets will remain on tenterhooks as the crisis unfolds,” it added.

Oil prices jumped more than 5 per cent on Monday as traders feared that military clashes between Israel and Hamas would escalate into a broader conflict, potentially disrupting Middle East crude supplies.

The IEA expects global crude output to increase by 1.5 million bpd and 1.7 million bpd this year and the next, respectively, driven by higher production in non-Opec+ countries.

“Overall Opec+ output is set to decline in 2023, although Iran may rank as the world’s second largest source of growth after the US,” the agency said.

Iran's production has recovered to a five-year high of 3.1 million bpd in recent months, despite current sanctions.

On October 4, the Opec+ group of crude oil-producing states decided to stick to its current output policy.

Opec+ members Saudi Arabia and Russia have reaffirmed their collective supply cut of 1.3 million bpd to the end of the year.

The group has enforced total production curbs of 3.66 million bpd, or about 3.7 per cent of global demand.

This includes a reduction of 2 million bpd agreed on last year, and voluntary cuts of 1.66 million bpd, announced in April and extended to December 2024.

Last month, oil prices surged past $95 a barrel and were closing in on the $100-mark amid concerns of tightening supplies.

"Rising prices focused the market’s attention on the prospect that ‘higher for longer’ interest rates could slow economic and demand growth," the IEA said.

"By early October, Brent futures tumbled by more than $12 to $84 a barrel as supply fears gave way to deteriorating macroeconomic indicators and signs of demand destruction in the US," the agency said.

Meanwhile, Russia's oil exports rose by 460,000 bpd to 7.6 million bpd in September, generating Moscow revenues of $18.8 billion, the IEA said.

Brent, the benchmark for two-thirds of the world’s oil, was trading 1.08 per cent higher at $86.75 a barrel at 1.21pm UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 0.80 per cent at $84.16 a barrel.

A Palestinian girl holds two children as she stands on a street in Gaza city as Israel continues to launch air strikes. AFP

Smoke plumes billow during Israeli air strikes on Gaza city. AFP

A Palestinian girl following an Israeli air strike in Khan Younis. Reuters

Palestinians survey the rubble of a house destroyed in Israeli strikes in Khan Younis, in the southern Gaza Strip. Reuters

A Palestinian woman, covered in dust, carries a child in Gaza city. AFP

A Palestinian man with a child outside al-Shifa hospital in Gaza city. AFP

Israeli soldiers walk through Kibbutz Be'eri. Days earlier Hamas militants killed more than a hundred civilians near the border with Gaza. Getty Images

A wounded Palestinian man Ala Al-Kafarneh, who survived Israeli strikes, attends a hospital in Gaza city. Mr Al-Kafarneh lost his pregnant wife and several members of his family in air strikes after they fled Beit Hanoun. Reuters

Supermarket shelves containing dry goods are left depleted in Tel Aviv. Getty Images

An injured Palestinian man arrives at Al-Shefa hospital in Gaza city. EPA

A boot lies on the ground outside a damaged house in Be'eri, Israel. EPA

An Israeli army self-propelled howitzer near the border with Gaza in southern Israel. AFP

Palestinian mourners during the funerals of Al-Agha family members killed in Israeli strikes in Khan Younis in the southern Gaza Strip. Reuters

Family and friends of May Naim, 24, who was killed by Palestinians militants at a party near the Israeli border with the Gaza Strip, during her funeral in Gan Haim, Israel. Getty Images

Palestinian children in Khan Younis fill bottles with water from public taps during the conflict with Israel. Reuters

Men outside a morgue in Khan Yunis console a woman mourning loved ones killed in an Israeli air strike. AFP

A Palestinian girl injured in Israeli strikes is taken to hospital in Gaza City. Reuters

An Israeli woman is evacuated by paramedics following a rocket attack launched from the Gaza Strip into Israel, in Sderot. Reuters

A man looks at the destruction in the ravaged Jabalia refugee camp, following overnight Israeli air strikes. AFP

The daughter of Zakaria Abu Maamar, a member of Hamas's political office, at her father's funeral, after he was killed in an air strike in Khan Younis. Reuters

A collapsed building after an Israeli bombardment in Gaza City. AFP

Firefighters attend a burning building after an Israeli bombardment in Gaza City. AFP

Women and children in Gaza City. AFP

An Israeli army soldier passes a Merkava battle tank in northern Israel near the border with Lebanon. AFP

An Israeli strike on the port of Gaza City. AFP

Demonstrators outside the West Los Angeles Federal Building in California during a rally in support of Israel. AFP

Mourners at the funeral of Palestinians killed in overnight Israeli shelling in Khan Younis in Gaza. AFP

Israeli journalists take cover during a rocket attack from Gaza in the southern Israeli kibbutz of Kfar Aza near the border. AFP

Palestinians rescue a young girl from the rubble of a destroyed residential building following an Israeli air strike. AP

Mourners at the graveside of Eden Guez, who was killed as she attended a festival that was attacked by Hamas gunmen from Gaza. Reuters

An Israeli fireman recovers after extinguishing cars set on fire by a rocket fired from Gaza. AP

Smoke billows from a boat after a strike by Israel on the port of Gaza City. AFP

Destroyed residential buildings in Gaza City. AP

Rockets from Gaza launched towards Israel. Reuters

A Palestinian woman sits among the rubble in the destroyed Al-Ramal neighborhood following an Israeli air strike in Gaza City. EPA

Israeli soldiers in armoured vehicles near the northern town of Kiryat Shmona close to the border with Lebanon. AFP

Buildings destroyed by Israeli strikes in Gaza city. Reuters

Nicole Izsak, right, confronts a Palestinian supporter near the Israeli consulate in New York, claiming her cousin is being held hostage in Gaza. AFP

The abandoned site of the Supernova music festival, besieged by Hamas militants in southern Israel. AFP

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An Israeli soldier holds a rescued dog as he takes position near a bomb shelter in Kibbutz Kfar Aza, southern Israel. Reuters

Protesters chant and wave the Palestinian flag at a rally in Melbourne, Australia. Getty Images

Israeli border police walk past a burnt-out car as rockets are launched from the Gaza Strip towards Israel, in Ashkelon, southern Israel. Reuters

Palestinians amid the rubble following Israeli air strikes that razed a neighbourhood in Gaza city. AP

Palestinians carry a wounded man at Al Shifa Hospital in Gaza city. EPA

Palestinians inspect damage in the aftermath of Israeli strikes in Khan Younis, southern Gaza Strip. Reuters