IEA Adjusts Oil Demand Outlook Amid Chinese Slowdown

The International Energy Agency (IEA) has reduced its 2024 oil demand growth forecast by 70,000 barrels per day (bpd) to 900,000 bpd. A slowdown in Chinese demand and an increase in electric vehicle uptake are key factors. Despite this, non-OPEC oil supply is rising, potentially leading to oversupply in 2024.

The International Energy Agency (IEA) has revised its 2024 oil demand growth forecast downward by 70,000 barrels per day (bpd), reducing it to 900,000 bpd, according to its latest monthly oil market report released Thursday. The Paris-based agency attributes the cut predominantly to slowing Chinese demand.

The forecast revision comes as a broader macroeconomic slowdown in China coincides with a spike in electric vehicle adoption, leading to an anticipated demand increase of just 180,000 bpd in 2024 from the world's second-largest oil consumer. "With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade," the IEA stated.

The Organization of the Petroleum Exporting Countries (OPEC) also reduced its 2024 forecast this week, albeit to a higher level than the IEA's. OPEC predicts oil demand growth of 2.03 million bpd in 2024 and 1.74 million bpd in 2025, but consecutive reductions signal the group's challenge in balancing the market. Meanwhile, rising non-OPEC oil supply led by the United States, Guyana, Canada, and Brazil could result in a surplus next year, putting additional pressure on OPEC+ to manage output. The IEA expects non-OPEC supply growth of 1.5 million bpd for both 2023 and 2024.

(With inputs from agencies.)