Global oil demand growth declines amid China's economic slowdown


(MENAFN) The International energy Agency (IEA) reported a significant deceleration in global oil demand growth, marking its weakest pace in over a year during the last quarter. This slowdown is largely attributed to the waning post-pandemic economic recovery in China. According to the IEA's monthly report released on Thursday, global oil consumption increased by a mere 710,000 barrels per day in the second quarter, the smallest rise since late 2022. Additionally, China's oil consumption experienced a slight decline. The agency forecasts that global oil demand growth will remain under 1 million barrels per day in both 2024 and 2025.

Despite the decrease in fuel use, the IEA highlighted that the influx of new supplies from the United States and other regions in the Americas is more than compensating for the decline. Consequently, global oil stocks monitored over the four months up to May have reached their highest levels since mid-2021. The IEA observed, "Global oil demand continues to decline," and noted that "Chinese consumption has contracted as the country’s post-pandemic recovery comes to an end."

Contrary to the IEA's assessment, many other industry experts, including trading houses and Wall Street banks, maintain a more optimistic view of oil consumption. They point out that crude oil prices are still hovering around USD85 a barrel on the London Stock Exchange. A seasonal increase in demand for motor fuel is also contributing to the reduction of inventories in the United States, which remains the world's largest oil consumer.

However, the IEA cautions that this current strength in demand may not be sustainable. The agency projects that global oil inventories will likely be balanced in the fourth quarter, even if the Saudi-led OPEC+ group does not adhere to its production plans. Looking ahead to next year, the IEA anticipates that markets will generally shift into surplus. As the agency metaphorically stated, "after a hot summer, cooler trends are set to prevail." 

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