Oil demand growth slows as non-OPEC supply expands, says IEA

Global oil demand growth is losing momentum, the International Energy Agency (IEA) said on Thursday as it trimmed its 2024 growth forecast in sharp contrast with projections by producer group OPEC.

The pace of expansion is set to decelerate to 1.22 million barrels per day (bpd) this year – about half of the growth in 2023 – owing in part to a sharp slowdown in Chinese consumption, the agency said.

It had previously forecast 2024 demand growth of 1.24 million bpd.

“The expansive post-pandemic growth phase in global oil demand has largely run its course,” the IEA said, adding that a harsher global macroeconomic climate is also likely to constrain growth this year.

The Brent crude oil benchmark has risen about 6% since the start of the year as attacks on shipping in the Red Sea have raised supply fears, with January outages in major non-OPEC oil producing countries such as the United States adding to concerns.

Gains, however, have been capped by worries over demand as major economies continue to grapple with high interest rates aimed at curbing sticky inflation.

The Paris-based agency has predicted oil demand will peak by 2030 as the world shifts to cleaner energy, but OPEC expects oil use to keep rising for the next two decades.

On the supply side, IEA raised its projection for 2024, estimating supply will grow by 1.7 million bpd versus its previous forecast of 1.5 million bpd.

The agency cited supply from producers outside OPEC and allies that make up the wider OPEC+ group of producers.

The IEA now expects supply to grow to a record high of about 103.8 million bpd, almost entirely driven by producers outside OPEC+, including the United States, Brazil and Guyana.

Given the robust outlook for supply outside OPEC+, the IEA expects a slight build in inventories in the first quarter, it said.