IEA raises oil demand growth forecasts for 2023 and 2024
The International Energy Agency (IEA) has revised its oil demand growth projections for 2023 and 2024 upward, despite a slowdown in economic growth among major economies. The Paris-based organization anticipates a potential oil supply surplus by early 2024, as the market is currently experiencing a "significant deficit" due to voluntary reductions by Saudi Arabia and Russia, which will last until the end of December.
Demand growth supported by US deliveries and China's record demand
The IEA's increased forecast for 2023 is backed by strong US shipments and an all-time high demand from China in September. The agency now projects global demand to grow by 2.4 million barrels per day (bpd) in 2023, up from the previous estimate of 2.3 million bpd. This aligns the IEA's outlook more closely with OPEC, which has raised its forecast to 2.46 million bpd.
IEA's 2024 forecast still lower than OPEC's prediction
For 2024, the IEA has boosted its oil demand growth prediction to 930,000 bpd from 880,000 bpd, based on expectations of interest rate cuts and the recent decline in crude prices. However, this is still considerably lower than OPEC's forecast of 2.25 million bpd. The gap between the two forecasts is roughly equivalent to about 1% of daily global oil consumption or more than the daily output of an OPEC member like Libya.
Factors contributing to the slowdown in oil demand growth
The anticipated deceleration in oil demand growth in 2024 is attributed by the IEA to the fading of the pandemic-driven economic recovery. Factors such as improved energy efficiency, growing electric vehicle adoption, and structural changes, are also considered. The outlook for 2024 will be a central topic at the upcoming OPEC+ meeting on November 26, where the group's current agreement limiting supply through 2024 will be discussed.
