IEA expects sharp drop in global oil demand growth in 2024

Oil barrels

The International Energy Agency (IEA) forecasts global oil demand growth to decline significantly in 2024, after slowing in Q4 2023 against the backdrop of “the unwinding of China’s post-pandemic release of travel demand,” according to its monthly Oil Market Report.

According to the agency, global oil demand growth plunged year-on-year (YoY) to 1.7 million barrels per day (bpd) in Q4 2023, a sharp slump from the average of the second and third quarters of 3.2 million bpd.

“Growth is projected to ease from 2.3 million bpd in 2023 to 1.2 million bpd in 2024, as macroeconomic headwinds, tighter efficiency standards and an expanding [electric vehicle (EV)] fleet compound the baseline effect,” read the report.

On the supply side, IEA indicated that global oil stockpiles are poised to soar by 1.5 million bpd in 2024 to hit a fresh high of 103.5 million bpd, buoyed by record production rates for the US, Brazil, Guyana, and Canada.

It stated, “Non-OPEC+ production will dominate growth this year, accounting for close to 1.5 million bpd. By contrast, OPEC+ supply is expected to hold broadly steady on last year, assuming extra voluntary cuts that started this month are phased out gradually in Q2 2024.”

“Rising geopolitical tensions in the Middle East, which accounts for one-third of the world’s seaborne oil trade, has markets on edge at the start of 2024,” the agency noted.

However, the Middle East region was reasonably well supplied in early 2024, barring major supply disruptions. The higher-than-expected uptick in non-OPEC+ output is also likely to outpace global oil demand growth by a healthy margin, it added.