The International Energy Agency (IEA) kept its 2024 global oil demand growth forecast unchanged on Tuesday but trimmed its 2025 estimate, citing the impact of a weakened Chinese economy on consumption.
The report from the IEA, which advises industrialised countries, is the second this week to flag that a sluggish economy is likely to curb demand in China, the world’s biggest oil importer and second biggest oil consumer.
“Weak growth in China, following the post-Covid surge of 2023, now significantly drags on global gains,” the Paris-based energy watchdog said in its monthly oil report.
While the impact of China’s post-pandemic economic bounce has faded, the IEA expects strong demand in Western economies, notably the United States, where one third of global gasoline is consumed.
The U.S. summer driving season is expected to be the strongest since the pandemic, the IEA said, adding supply cuts by the Organization of the Petroleum Exporting Countries and allies (OPEC+) had tightened the physical market.
“For now, supply is struggling to keep pace with peak summer demand, tipping the market into a deficit,” the IEA said.
World oil demand will rise by 950,000 barrels per day (bpd) in 2025, the IEA said, down 30,000 bpd from the previous forecast. It left this year’s growth forecast unchanged at 970,000 bpd.
Outside the developed countries of the OECD, demand in the second quarter of this year was the slowest since the pandemic year of 2020, the IEA said.
China’s share of this demand growth is expected to fall to about a third in 2024, compared to just over two thirds in 2023.
The IEA said the fall in China was most marked in gasoil and naphtha, reflecting less construction and manufacturing, and implying “a pause in the relentless expansion of the country’s petrochemical sector”.
OPEC on Monday cut its 2024 demand forecast for the first time since July 2023, also citing China. (Reuters)
