IEA sees subdued oil demand growth as economic headwinds remain

Oil rig pumpjacks, also known as thirsty birds, extract crude from the Wilmington Field oil deposits area near Long Beach, California July 30, 2013. REUTERS/David McNew/File photo

LONDON — The International Energy Agency sees oil demand growth this year at 1.3 million barrels per day (bpd), down a full million bpd from 2023, but up by 110,000 bpd from its previous month’s forecast as Houthi attacks in the Red Sea delay supplies.

Dovish signals from central banks indicated a path out of economic doldrums, the IEA said on Thursday, but subdued economic data in China remains a concern.

The IEA’s growth forecast lags that of OPEC, which is more bullish on the economy, by nearly 1 million bpd.

READ: OPEC sticks to oil demand view, sees better economic growth

The settling down of post-pandemic turbulence and a cloudy economic outlook will weigh on demand, the agency said, even as shipping disruptions provide a short-term boost.

“The global economic slowdown acts as an additional headwind to oil use, as do improving vehicle efficiencies and expanding electric vehicle fleets,” the Paris-based agency said in its monthly oil report.

“Growth will continue to be heavily skewed towards non-OECD countries, even as China’s dominance gradually fades. The latter’s oil demand growth is expected to slow from 1.7 million bpd in 2023 to 620,000 bpd in 2024,” the IEA said.

Should the producer bloc OPEC+ maintain voluntary cuts through 2024, the IEA said it sees the market in slight deficit rather than surplus, adding oil prices were rangebound in early March after the market priced in its last cut announcement.

Oil supply growth from non-OPEC+ countries oil will continue to significantly eclipse oil demand expansion, the IEA added.