Global Oil Demand Growth Expected to Decline in 2024, says International Energy Agency

Riyadh - The International Energy Agency (IEA) has forecasted a significant decline in global oil demand growth for 2024, following a slowdown in the fourth quarter of 2023. The agency attributes this deceleration to the unwinding of China's post-pandemic release of travel demand, as stated in its monthly Oil Market Report.

According to the report, global oil demand growth plummeted year-on-year (YoY) to 1.7 million barrels per day (bpd) in Q4 2023, marking a sharp decline from the average growth rate observed during the second and third quarters at 3.2 million bpd.

The IEA predicts that growth will continue to ease from an estimated 2.3 million bpd in 2023 to just 1.2 million bpd in 2024. This projection takes into account various factors such as macroeconomic headwinds, tighter efficiency standards, and an expanding electric vehicle (EV) fleet that contribute to the baseline effect.

On the supply side, the IEA highlights that global oil stockpiles are expected to increase by approximately 1.5 million bpd in 2024, reaching a new high of around 103.5 million bpd. This surge is attributed to record production rates from countries such as the United States, Brazil, Guyana, and Canada.

The report states that non-OPEC+ production will dominate growth this year with an estimated contribution of close to 1.5 million bpd. In contrast, OPEC+ supply is anticipated to remain relatively steady compared to last year unless additional voluntary cuts implemented this month are gradually phased out by Q2 of 2024.

The agency also notes rising geopolitical tensions within the Middle East region which accounts for one-third of global seaborne oil trade. However, it highlights that the region is reasonably well supplied in early 2024, barring any major supply disruptions. Additionally, the higher-than-expected increase in non-OPEC+ output is likely to outpace global oil demand growth by a significant margin.

As the global energy landscape continues to evolve, these projections from the IEA provide valuable insights into future trends and dynamics within the oil market.