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“Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May," said the energy body.
The current slowdown in global demand for oil looks set to continue as China’s “post-pandemic rebound” seems to have run its course, according to the latest data from the International Energy Agency (IEA).
The growth in global oil demand will slow to around one million barrels per day (mbbl/d) this year, and then into 2025 as China’s economic issues such as inflation and weak confidence become more apparent, said the July 2024 Oil Market Report.
The energy group added that global demand in the second quarter of 2024 rose 710,000 barrels per day (bpd) on the year, one of the lowest quarterly increases seen in years.
“Oil consumption in China, long the engine of global oil demand growth, contracted in both April and May, and is now assessed marginally below year earlier levels in 2Q24,” said the report, a “stark contrast to annual gains of 1.5mmbl/d [million barrels per day] in 2023.”
It added that demand for industrial fuels and petrochemical feedstocks was particularly weak, although “delivery data of gasoil and naphtha for OECD economies came in higher than expected, potentially signalling a budding recovery in Europe’s ailing manufacturing sector”.
The energy body argued that while the bounce “temporarily pushed quarterly OECD demand growth back into positive territory, non-OECD countries will account for all this year’s global gains”.For 2024 as a whole, global oil supply growth is forecast to average 770,000bpd, which will boost oil supply to a record 103mbbl/d, it added.
Meanwhile, non-OPEC+ output is expected to rise by 1.5mbbl/d, while OPEC+ production will fall by 740,000bpd year-on-year, if existing voluntary cuts are maintained.
OPEC still foresees reasonably strong economic growth around the world for the rest of this year and into 2025, prompting steady demand for its oil.
Earlier this week, the Organization of the Petroleum Exporting Countries said global oil demand would jump by 2.25mbbl/d in 2024, writing in its monthly report.
Global oil demand would also rise again by 1.85mbbl/d the following year, with both estimates almost unchanged from figures released last month, the oil body added.
The IEA’s latest report also stated that overall global supply growth in 2025 is projected at a much stronger 1.8mbbl/d, with non-OPEC+, mainly in the US, Canada, Guyana and Brazil, leading gains for a third consecutive year.
In mid-June, the IEA said global oil demand is expected to reach its highest point by 2030 and start to decrease the following year, and oil supply capacity will significantly exceed demand by the end of this decade. |
