Global oil demand decelerated in the second quarter, with growth easing to 710,000 barrels per day year-on-year, driven by rising adoption of electric vehicles and economic headwinds, an analysis showed. The International Energy Agency (IEA) reported in its latest report that demand growth in the second quarter was also the slowest increase since the fourth quarter of 2022.
IEA’s demand growth forecast for 2024
The IEA has forecast an oil demand growth of 970,000 barrels per day (bpd) in 2024, largely unchanged from its outlook last month. This projection contradicts the view of OPEC, the oil producers’ alliance, which expects strong demand growth in 2024 and 2025. In its monthly report on June 10, OPEC noted that world oil demand will rise by 2.25 million bpd and 1.85 million bpd in 2024 and 2025, driven by markets including China, the Middle East, India, and Latin America.
What are the reasons behind IEA’s lower demand estimate?Â
Outlining the reasons for its lower estimate, the IEA report said that “Chinese consumption contracted, as the country’s post-pandemic rebound has run its course. Global gains are forecast to average just below one million bpd in 2024 and 2025, as subpar economic growth, greater efficiencies and vehicle electrification act as headwinds.” The report also noted that “demand for industrial fuels and petrochemical feedstocks was particularly weak.”
Global oil supply and refinery throughputs
The energy think tank further revealed that the global oil supply rose by 150,000 bpd to 102.9 million bpd in June. It also projected global refinery throughputs rising by 950,000 bpd to 83.4 million bpd in 2024, and by 630,000 bpd to 84 million bpd next year.
OPEC’s optimistic outlook
Amid IEA’s projected slowdown in oil demand growth, OPEC remains optimistic about the future. Speaking at the International Economic Forum in June, OPEC Secretary-General Haitham Al-Ghais said that the world will witness continued oil demand driven by a rebound in the travel and tourism sector. He also added that OPEC is working to ensure supply, stability, and resilience of the oil market.
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