The IEA has lowered its global oil demand growth forecast for 2024 to 900,000 bpd, down from the previous estimate of 2.1 million bpd, primarily due to a significant slowdown in Chinese oil consumption.
China’s oil demand is expected to grow by only 180,000 bpd this year, impacted by a broad economic slowdown and a shift towards alternative fuels.
The IEA anticipates global oil demand to plateau by the end of the decade, with current trends indicating modest increases or declines in most countries outside of China.
The International Energy Agency (IEA) said on Thursday that global oil demand growth has markedly decelerated and is set for just 900,000 barrels per day (bpd) in 2024 due to rapidly slowing 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 lowest pace of growth since 2020, the IEA said in its closely-watched Oil Market Report out today.
The main driver of the sluggish growth has been “a rapidly slowing China,” where oil consumption contracted on an annual basis for a fourth straight month in July, by 280,000 bpd, the Paris-based agency said.
The IEA now sees annual growth in global demand at 900,000 bpd this year, compared to 2.1 million bpd growth in 2023. The rise in demand for 2025 is seen at an equally subdued level of about 950,000 bpd.
Referring to China, the agency forecasts the country’s oil demand is now set to expand by only 180,000 bpd this year, “as the broad-based economic slowdown and an accelerating substitution away from oil in favour of alternative fuels weigh on consumption.”
The picture isn’t rosy outside China, too, the IEA says, noting that “Outside of China, oil demand growth is tepid at best.”
In its monthly report, the agency also reiterated its view of a global oil demand peak by the end of the decade.
“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 IEA said.
Earlier this week, OPEC also trimmed its oil demand growth forecast, citing concerns in China. In its Monthly Oil Market Report, OPEC expects global demand will grow by 2.03 million bpd in 2024, down from its 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 in the real estate sector and the increasing penetration of LNG trucks and electric vehicles are likely to weigh on diesel and gasoline demand going forward.”
Despite the second consecutive downward revision of its demand growth estimate, OPEC is still much more optimistic than the IEA on Chinese and global oil consumption growth this year.
By Tsvetana Paraskova for Oilprice.com
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