The International Energy Agency (IEA) mentioned in its oil market report released on Friday that next year's oil demand growth is expected to decelerate more than previously forecasted, citing economic challenges, slower-than-anticipated economic recovery, and the rapid growth of the electric vehicle sector.
The IEA's report estimates the growth of oil demand in 2024 to slow down to an additional 1 million barrels per day, a decline of 150,000 barrels per day from the agency's prior predictions.
Amid skyrocketing interest rates and tighter bank credit conditions, the global economic outlook remains challenging. When combined with the current sluggishness in manufacturing and trade, the room for oil demand growth appears limited.
However, taking into account the tightening of supplies due to OPEC+'s production cuts, the IEA believes that oil prices still have room to rise. This past Thursday, Brent crude prices momentarily surpassed $88 per barrel, marking a new high since January and are currently fluctuating above $86.
The IEA cautioned that if OPEC+ continues its current production cut policies, oil inventories could decrease by 2.2 million barrels per day in the third quarter and by 1.2 million barrels per day in the fourth quarter, potentially pushing oil prices even higher.
Looking at this year's oil demand, the IEA anticipates a rise of 2.2 million barrels per day in 2023, influenced by summer air travel, increased fuel usage for electricity generation, and a surge in China's petrochemical activities. This prediction aligns closely with their prior estimates.
The IEA expressed optimism about China's economy in its monthly report, expecting China to account for over 70% of this year's oil demand growth.
