Slowing consumer spending expected to reduce global jet fuel demand, weigh on oil prices
Date
8/15/2024 5:58:20 AM
(MENAFN) Global jet fuel demand is projected to decline as consumer spending slows and travel budgets are squeezed, a trend that may put downward pressure on oil prices in the near future. The first half of this year saw global oil demand falling short of expectations, primarily due to weaker-than-anticipated consumption in the United States and China, the world’s two largest crude markets. Jet fuel, which represents approximately 7 percent of global oil demand, was anticipated to drive growth this year as travel rebounded post-pandemic.
Data from Goldman Sachs indicates that global jet fuel demand averaged around 7.49 million barrels per day through July, marking a 500,000-barrel daily increase from the same period last year. However, to align with the bank's forecast of a 600,000-barrel daily increase for the year, demand must accelerate in the coming months. Recent concerns from major U.S. airlines and travel companies about diminishing consumer spending—linked to a reduction in disposable income—are likely to impact leisure travel negatively.
In response to these shifting dynamics, OPEC has revised its oil demand forecast for 2024 downward for the first time since its July 2023 release, while the International Energy Agency has also adjusted its 2025 estimates. Both institutions attribute these adjustments to weaker-than-expected economic growth in China and other global economies, reflecting broader challenges in the oil market.
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