Supply from the U.S., Brazil, Canada and Guyana is set to grow
It’s possible that China’s oil demand has peaked, IEA head of oil Industry and markets Toril Bosoni said in an interview with Bloomberg TV on Thursday.
“It’s not just the economy and the shift, the slowdown in the construction sector,” Bosoni said. “It’s the transition to electric vehicles, high speed rail and gas in trucking that is undermining Chinese oil demand growth.”
Amid this extended weakness in Chinese demand, crude prices have retreated 11 per cent since early October despite ongoing hostilities between Israel and Iran, as traders focus growing output in the Americas, the Paris-based IEA said. The decline foreshadows a “well-supplied market in 2025,” it added. Brent futures traded near US$72 a barrel on Thursday.
Global oil consumption will increase by 920,000 barrels a day this year — less than half the rate seen in 2023 — to average 102.8 million per day, it said. Next year, demand will grow by 990,000 barrels a day.
“The sub-one million barrel-a-day growth pace for both years reflects below-par global economic conditions with the post-pandemic release of pent-up demand now complete,” according to the report. “Rapid deployment of clean energy technologies is also increasingly displacing oil in transport and power generation.”
The agency, which advises major economies, predicted earlier this year that world demand will stop growing this decade amid a shift away from fossil fuels toward electric vehicles and renewable energy.
While demand growth cools, supplies from producers such as the United States, Brazil, Canada and Guyana are set to grow this year and next by 1.5 million barrels a day, the agency predicts. As a result, world supplies will exceed demand next year by more than one million barrels a day, even if the 23-nation OPEC+ cartel abandons plans to restore output.
OPEC’s secretariat has belatedly recognized the demand slowdown, cutting its forecasts for this year by 18 per cent during four consecutive monthly downgrades. Nonetheless, its projection of 1.8 million barrels a day of growth remains roughly double the rate seen by the IEA, and higher than most other market observers.