The International Energy Agency has revised down its prediction for oil demand growth this year, due to lower-than-expected consumption and a decline in industrial activity in Organisation for Economic Co-operation and Development member countries.
Demand for 2024 was adjusted lower to 1.2 million barrels per day, about 100,000 bpd lower compared to last month's estimates, the Paris-based agency said in its April report on Friday.
The increase in oil demand “continues to lose momentum globally”, with the market recording a first-quarter growth of 1.6 million bpd, around 120,000 bpd below its previous forecast “due to exceptionally weak OECD deliveries”, it said.
The lower forecast is also expected to continue in 2025, with the demand growth next year projected to decelerate further to 1.1 million bpd, the IEA said.
“With the post-Covid rebound now largely complete, and vehicle efficiencies and an expanding EV [electric vehicle] fleet acting as further drags on oil demand, growth in 2024 and 2025 slows to 1.2 million bpd and 1.1 million bpd, respectively.”
Last month, the IEA raised its annual oil demand growth forecast, citing higher-than-expected crude consumption of 1.7 million bpd in the first quarter.
It expected oil demand to grow by 1.3 million bpd in 2024, up from its previous estimate of about 1.2 million bpd, but significantly lower than the expansion of 2.3 million bpd seen last year.
In its latest report, non-OECD countries are projected to dominate the outlook, with forecast demand set to increase by 1.3 million bpd in 2024 and 1.2 million bpd in 2025, the agency said. By contrast, consumption in the OECD will decline by around 60,000 bpd in both years.
China will continue to lead non-OECD growth, “even as its share of the global increase slumps from 79 per cent in 2023 to 45 per cent in 2024 and 27 per cent next year”, the agency said.
On the other hand, the US – which along with China are the world's two biggest economies and consumers of crude – will drive supplies among non-Opec+ members, the IEA said.
“Sustained output curbs by the Opec+ alliance mean that non-Opec+ producers, led by the Americas, will continue to drive world oil supply growth through 2025,” the report said.
The IEA's forecast stands in stark contrast to Thursday's outlook report from Opec, which held firm to its forecasts for global oil demand and economic growth in 2024 and 2025, with expectations of “robust” summer months for the crude market.
The group had forecast oil demand growth of 2.2 million barrels per day for this year and 1.8 million bpd for 2025, sticking to estimates it has made since February, Opec said in its latest monthly oil market report.
Benchmark crude oil prices continued their upward trajectory in March and early April, as heightened geopolitical tensions coincided with the prospect of a tighter supply-demand balance through the remainder of the year.
Brent, the benchmark for two thirds of the world’s oil, hit a six-month high of $90 a barrel in early April amid escalating tensions in the Middle East, attacks on Russian refineries and an extension of Opec+ outputs cuts through June.
Russian refinery outages added to product market unease, while Opec+ put pressure on some countries to increase compliance with agreed voluntary production cuts through the second quarter of this year, the agency said.
Brent was trading 2.03 per cent higher at $91.56 a barrel at 5.25pm UAE time on Friday. West Texas Intermediate, the gauge that tracks US crude, rose 2.38 per cent at $87.04 a barrel.
