IEA Raises Global Oil Demand Forecast for 2024, Slightly Lowers 2025 Outlook

The International Energy Agency (IEA) has raised its oil demand growth forecast for this year, citing the impact of China's economic slowdown on consumption, but slightly cut its forecasts for next year. The IEA estimates that global demand will increase from 862,000 barrels per day to 921,000 barrels per day in 2024, largely due to stronger-than-expected kerosene deliveries in OECD countries. Growth forecasts for 2025 have been slightly reduced from 998,000 barrels per day to 990,000 barrels per day.

This indicates a sharp slowdown from the approximately 2 million barrels per day growth seen last year, due to diminishing post-pandemic demand growth and the rapid adoption of clean energy transportation technologies, which are curbing oil consumption growth. The IEA stated, “China's pronounced slowdown has been the main barrier to demand, and its growth this year is expected to be only a tenth of the 1.4 million barrel per day increase from 2023.”

China's demand decreased by 70,000 barrels per day in September, marking the sixth consecutive month of declines. The agency anticipates that the country will record an increase of 140,000 barrels per day in the fourth quarter and 190,000 barrels per day in 2025, which will be below previously estimated growth of 220,000 barrels per day.

Total global demand is expected to average 102.8 million barrels per day this year and rise to 103.8 million barrels per day next year. IEA estimates remain significantly lower than those of OPEC. The oil-producing group downgraded its forecasts for the fourth consecutive month earlier this week but still sees strong demand growth of 1.82 million barrels per day this year and 1.54 million barrels per day next year.

The IEA report comes at a time when oil prices continue to be pressured by a bleak demand outlook and expectations of an oversupply next year. Brent crude oil is currently trading around $72 per barrel, while the U.S. oil benchmark West Texas Intermediate is hovering around $68 per barrel.

Meanwhile, the IEA noted that the return of Libyan barrels to the market has balanced declining supplies from Kazakhstan and Iran, resulting in a 290,000 barrels per day increase in global oil supply in October. Total supply is projected to average 102.9 million barrels per day this year and 105 million barrels per day next year.