April 16, 2024 [Argus]- The IEA has released its first forecast for 2025 which shows global oil demand growth slowing to 1.15mn b/d next year — some 700,000 b/d lower than Opec’s latest projection.
In its latest Oil Market Report (OMR), the Paris-based agency also lowered its oil demand growth forecast for this year by 130,000 b/d to 1.2mn b/d, citing lower heating fuel use and a protracted factory slump in advanced economies.
The 2024-25 figures contrast sharply with 2022 when the global economy’s emergence from the Covid-19 pandemic led to a demand increase of 2.25mn b/d — something the IEA said had now largely run its course.
“Despite the deceleration that is forecast, this level of oil demand growth remains largely in line with the pre-Covid trend,” it said. The IEA also reiterated its view that a peak in oil consumption is in sight this decade, although it notes that without an increased investment push into clean energy technologies, “the decline in global oil demand following the peak will not be a steep one”.
The IEA said its 2025 forecast reflects a “somewhat sub-par economic outlook” and included vehicle efficiencies and an expanding electric vehicle (EV) fleet acting as “further drags on oil consumption.”
China, which has led much of the world’s oil demand growth over the past few decades, is slowing down, according to the IEA. The agency lowered its 2024 forecast for Chinese oil demand growth by 80,000 b/d to 540,000 b/d, falling to 330,000 b/d in 2025, although China still remains the single largest contributor to global growth next year.
The IEA’s latest forecasts continue to reflect stark differences with Opec in the way they see oil demand unfolding over the years and decades ahead. Opec sees oil demand growth substantially higher at 2.25mn b/d in 2024 and 1.85mn b/d in 2025.
On global oil supply, the IEA nudged down its 2024 growth estimate by 30,000 b/d to 770,000 b/d. While non-Opec+ production is projected to expand by 1.6mn b/d, this is partially offset by an 820,000 b/d forecast fall from Opec+ — assuming the group’s latest voluntary cuts remain in place until the end of the year.
Relentless oil supply growth from outside Opec+ is set to continue putting pressure on the alliance to keep production lower for longer. The IEA said that additional production from the US, Brazil, Guyana and Canada “alone could come close to meeting world oil demand growth for this year and next.”
The IEA’s latest supply forecast assumes Opec+ voluntary cuts remain in place until the end of 2024, which would keep the market in a deficit of 270,000 b/d, it estimates. Opec+ has yet to decide on its output policy for the second half of the year and may do so at a ministerial meeting scheduled for 1 June in Vienna.
Global observed oil stocks increased by 43.3mn bl to a seven-month high in February, despite a further 24.6mn bl decline in on land stocks, the IEA said. Oil on water rose to a “sizeable” 67.8mn bl in February, driven by shipping disruptions in the Red Sea that have forced vessels to take the longer alternate route around the southern tip of Africa.
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