IEA maintains oil demand forecast for 2024, cuts forecast for 2025 due to weak Chinese consumption
Date
8/13/2024 8:02:26 AM
(MENAFN) The International energy Agency (IEA) has announced that it will keep its forecast for global oil demand growth in 2024 unchanged, but has revised its estimate for 2025 downward. This adjustment is largely due to the impact of weak Chinese consumption on the broader global economic landscape. China's post-COVID-19 economic recovery has slowed, which is curbing the country's oil demand and, in turn, dampening global demand. Despite this, advanced economies, particularly the United States, have stepped in to compensate for the shortfall. The U.S., which alone consumes a third of the world's gasoline, is expected to have its strongest summer driving season since the pandemic began. This robust demand in the U.S. is playing a crucial role in offsetting the weaker Chinese market.
Moreover, the IEA highlighted that the production cuts implemented by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) are contributing to a tightening of the physical oil market. The agency noted that the current supply is struggling to keep pace with the peak summer demand, resulting in a market deficit. This scenario has intensified concerns about the global oil supply, as the imbalance between supply and demand grows. The IEA's monthly oil report reflects these dynamics, underscoring the significant role that U.S. demand is playing in the global oil market amid the challenges posed by weakening Chinese consumption.
In its report, the IEA also pointed out that Chinese demand for oil has decreased for the third consecutive month as of June, which has clearly overshadowed any gains seen in other parts of the global market. The agency revised its forecast for oil demand growth in 2025 to 950,000 barrels per day, down from its previous estimate of 980,000 barrels per day. However, the IEA has maintained its 2024 oil demand growth forecast at 970,000 barrels per day, indicating that while the short-term outlook remains stable, the longer-term prospects are being tempered by China's economic slowdown. Despite the challenges, the IEA's report suggests that the global oil market remains resilient, though it faces uncertainties that could impact future demand growth.
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