The International Energy Agency (IEA) reported on December 14 that global oil demand growth is slowing down sharply, as economic activities in major countries weaken. This development has led to a significant revision in the agency's forecast for this quarter.
The IEA has reduced its forecast for global oil demand growth in 2023 by 90,000 barrels per day to 2.3 million barrels per day and increased its forecast for 2024 by 130,000 barrels per day to 1.1 million barrels per day.
The agency has cut its forecast for oil demand growth in the fourth quarter of 2023 by nearly 400,000 barrels per day, citing weaker-than-expected demand in Europe, Russia, and the Middle East as the primary reasons.
The IEA's monthly report stated, "There is increasing evidence of a slowdown in oil demand, reflecting the deteriorating macroeconomic environment."
In response to the slowdown in oil demand, OPEC+ (the Organization of the Petroleum Exporting Countries and allies including Russia) announced a new production cut plan on November 30. However, this move has significantly impacted the group's market share. The IEA noted that OPEC+'s share in the global market has been reduced to its lowest level since its establishment in 2016, currently standing at 51%.
The market share lost by OPEC+ has primarily been captured by the United States. The IEA report highlighted that due to increased drilling efficiency and productivity in shale regions, U.S. oil supply exceeded 20 million barrels per day in September. The U.S. is expected to achieve a supply growth of 1.4 million barrels per day in 2023, accounting for two-thirds of the 2.2 million barrels per day supply increase from non-OPEC+ countries.
The imbalance in oil supply and demand has led to a significant drop in international oil prices. Since late September, oil prices have fallen by about a quarter, with Brent crude oil currently priced at $75.61 per barrel.
Contrasting Views Between IEA and OPEC On Wednesday, OPEC maintained a "cautiously optimistic" stance on the oil market for 2024 in its monthly report.
OPEC attributed the recent decline in oil prices to "exaggerated concerns" about oil demand growth and maintained its relatively high forecast for oil demand next year.
OPEC reiterated its forecast for world oil demand growth in 2023 at 2.46 million barrels per day, broadly in line with the IEA's prediction.
However, OPEC's forecast for world oil demand growth in 2024 is much higher than the IEA's, predicting an increase of 2.25 million barrels per day compared to the IEA's forecast of 1.1 million barrels per day.
