Corrects IEA 2023 demand growth forecast in first and second paras; 2H deficit in penultimate para
The IEA has left its global oil demand growth forecast for this year broadly unchanged, citing strong summer air travel, increased oil use for power generation and higher Chinese petrochemical activity. But demand growth for 2024 has been downgraded.
The Paris-based agency's latest Oil Market Report (OMR) sees oil demand growing by 2.22mn b/d in 2023 to a record 102.17mn b/d, compared with a 2.23mn b/d increase forecast in last month's report. This year's overall demand is 90,000 b/d higher than the previous forecast though, driven by an upgrade to the 2022 baseline estimate.
"World oil demand hit a record 103mn b/d in June and August could see yet another peak," the IEA said, adding that Chinese demand was "stronger than expected."
China will account for most of the growth this year — around 70pc — while developing economies such as India and Brazil are other drivers, the IEA said.
While OECD countries will see oil demand growth of 120,000 b/d this year, down by 30,000 b/d compared with the July OMR, the IEA said this is likely to be the bloc's "final year of growth." It expects OECD demand to fall by 390,000 b/d in 2024, some 120,000 b/d below last month's estimate.
The IEA sees oil demand growth next year more than halving, to around 1mn b/d. This is down by 150,000 b/d compared with its last report, leaving expected demand at 103.16mn b/d. The agency attributes the slowdown in growth in 2024 to a slowing post-pandemic recovery, lacklustre economic conditions, tighter efficiency standards and increased uptake of electric vehicles.
The IEA has previously said that it expects oil demand to peak by 2030.
The IEA sees global oil supply expanding by 1.5mn b/d this year to a record 101.5mn b/d. It said while an extension of extra voluntary supply cuts by Opec+ leaders Saudi Arabia and Russia into September would further tighten the market, record-breaking non-Opec+ supply would temper the impact. It said non-Opec+ supply is at its highest ever and "nearly matches the Opec+ alliance barrel-for-barrel and looks set to do so through next year." For 2023 it expects producers outside Opec+ to account for 49pc of global supply.
The IEA put the call on Opec crude at 29.3mn b/d this year, unchanged from last month.
This year's estimates from the IEA indicate a supply deficit of 670,000 b/d for 2023, up from last month's 580,000 b/d. The agency said a supply surplus of 355,000 b/d in the first half of the year will be more than offset by a 1.67mn b/d deficit in the second half.
It said global observed oil inventories fell by 17.3mn bl in June, with industry stocks 115.4mn bl below the five-year average. Preliminary data suggest global inventories drew further in July and August.
