IEA reduces its 2025 oil consumption forecast as China offsets gains globally
The International Energy Agency (IEA), citing the impact of a weaker Chinese economy on consumption, kept its forecast for global oil demand growth in 2024 unchanged but lowered its estimate for 2025.
This is the second report this week from the IEA (which advises industrialised nations) to warn that a slowing economy will likely curb the demand for oil in China, which is the world's largest oil importer and the second largest oil consumer.
The Paris-based energy monitor said that "weak growth in China following the post-Covid boom of 2023 now significantly drags down global gains" in its monthly oil reports
The IEA predicts that the West, notably in the United States where a third of the world's gasoline is consumed, will continue to be strong.
The IEA stated that the summer driving season in the United States is expected to be the best since the pandemic. It added that supply cuts made by the Organization of Petroleum Exporting Countries (OPEC+), had tightened the market.
The IEA stated that "for now, the supply struggles to keep up with the peak summer demand and the market is in deficit."
The IEA forecasts that the world's oil demand will increase by 950,000 barrels a day (bpd), down 30,000 bpd compared to the previous estimate. The IEA left the growth forecast for this year unchanged at 970,000 barrels per day (bpd).
The IEA reported that outside the developed countries in the OECD region, demand was at its lowest level since the pandemic of 2020.
China's share in this growth in demand is expected to drop to about a third by 2024, from just over two-thirds in 2023.
The IEA stated that the drop in China was most pronounced in gasoil, naphtha and other petrochemicals, reflecting less manufacturing and construction, and implying a "pause in the relentless growth of the country's petrochemical industry".
OPEC cut its demand forecast for 2024 on Monday, the first time it has done so since July 2023.
Even after its downward revision the group of oil-producing nations still predicted that world oil demand will rise by 2,11 million bpd in this year, compared to the IEA’s 970,000 bpd.
(source: Reuters)
