Global Oil Demand Growth Stalls Amid Weak Chinese Consumption

The International Energy Agency (IEA) forecasts a slower rise in global oil demand for 2023, citing weak Chinese consumption. The demand growth is expected to plateau by the end of the decade. In contrast, OPEC maintains a higher growth projection for 2024. The market faces potential oversupply concerns as non-OPEC nations ramp up production.

Global oil demand will rise less than previously anticipated this year due to weakness in China, the International Energy Agency (IEA) reported. The agency projects a 900,000 barrels per day (bpd) increase, down 70,000 bpd from its prior forecast. According to the IEA, worldwide oil consumption is approaching a plateau this decade, contrary to higher forecasts from the Organization of the Petroleum Exporting Countries (OPEC).

China's slowed economic growth and the shift towards electric vehicles have significantly affected oil demand. The IEA now expects Chinese demand to rise by 180,000 bpd in 2024, a significant drop from July's projection of 410,000 bpd. OPEC, in contrast, projects a stronger demand growth led by Chinese expansion. This disparity equates to an over 1% difference in expected global demand growth.

Major economies, including the United States, are also seeing pressures on oil demand. U.S. gasoline consumption has declined year-on-year in most months of 2023. Meanwhile, global oil prices have dropped, with Brent crude falling below $70 a barrel. The IEA warns that rising global supply, driven by non-OPEC nations, could lead to an oversupplied market by 2025 if OPEC+ unwinds its output cuts as planned.

(With inputs from agencies.)