IEA cuts 2024 oil demand growth estimate
– reiterates end-decade ‘plateau’ forecast
Kaieteur News – On Thursday the International Energy Agency cut its global oil demand growth estimate for 2024 to 910,000 b/d, citing China’s rapid slowdown and shift in transport modes, reiterating that demand is on track to plateau by the end of the decade.
The IEA’s latest global demand growth estimate for 2024 is down from 970,000 b/d in its previous monthly oil market report. It maintained its 2025 growth estimate at 950,000 b/d.
The IEA estimated China’s oil demand would grow by just 180,000 b/d in 2024, compared with a previous estimate of 300,000 b/d, saying China’s oil consumption had dropped year on year for a fourth consecutive month in July, contrasting with an annual growth rate of 1.5 million b/d in 2023. For China, a “broad-based economic slowdown and an accelerating substitution away from oil in favor of alternative fuels weigh on consumption. Surging EV sales are reducing road fuel demand while the development of a vast national high-speed rail network is restricting growth in domestic air travel,” the IEA said.
In the OECD meanwhile, “structural headwinds and anemic economic growth mean deliveries continue to contract,” the IEA said. “Current trends reinforce our expectation that global demand will plateau by the end of this decade.”
“While recent falls in prices and central bank interest rate cuts may support higher H2 2024 oil use, weakening global economic sentiment and worsening conditions in China argue against a return to the exceptional rates of growth seen during the post-pandemic rebound,” it added.
The IEA hedged its bearish message by noting China’s consumption slowdown is not being replicated in other emerging economies. Brazilian oil consumption keeps “going from strength to strength, propelled by the country’s juggernaut agricultural exports, while India’s growth of 200,000 b/d this year is set to take over first place from China,” it said. Earlier in the week, OPEC trimmed its own estimate of global oil demand growth in 2024 to 2 million b/d – still well ahead of the IEA. Analysts at S&P Global Commodity Insights forecast oil demand growth of 1.5 million b/d in 2024 and 1.2 million b/d in 2025.
Quota crunch
On the supply side, the IEA estimated spare production capacity in the OPEC+ group, excluding Iran and Russia, to be 5.7 million b/d in August. It estimated Iraq had exceeded OPEC+ production quotas by 470,000 b/d in August, with the UAE exceeding its quota by 390,000 b/d. The Platts Dated Brent North Sea oil benchmark was assessed at $71.08/b Sept. 11, up 52 cents on the session, Commodity Insights data showed.
