IEA Downgrades Forecast for 2024 Oil-Demand Growth

The International Energy Agency (IEA) on Friday downgraded its forecast for 2024 oil-demand growth to 1.2 million barrels a day from the previous 1.3 million bpd, noting “exceptionally weak” deliveries in Organization for Economic Co-operation and Development (OECD) countries, a largely complete post-COVID rebound, and increasing market share gains by electric vehicles (EVs), especially in China.

“Given that China was the last major economy to lift public health restrictions related to the pandemic and saw an abrupt economic recovery in mid-2023, this easing of year-on-year demand growth is likely to continue during 2024,” the IEA said.

However, with a weakening economic growth rate and “the rapid domestic uptake of oil-substituting technologies such as electric vehicles (EVs) and high-speed rail,” roughly only a third of oil-demand growth is expected from China in 2024 and 2025.

The Paris-based agency said that the level of demand growth, however, is in line with the pre-pandemic levels, even amid “muted expectations for global economic growth this year and increased deployment of clean energy technologies.”

Earlier this month, oil prices rose to their highest level in 2024, as the Organization of the Petroleum Exporting Countries (OPEC) and its non-OPEC allies, a group dubbed OPEC+, left its 2.2-million-barrel-per-day production cuts in place.

Bank of America Securities analysts recently forecast a global oil market deficit of 450,000 barrels per day in the second and third quarters, with prices climbing as high as $95 a barrel in the summer, when robust demand is expected to collide with crimped supply.

International benchmark Brent crude futures for June delivery traded 1.6% higher at $91.20 per barrel as of 8:41 a.m. ET, while U.S. West Texas Intermediate futures for May delivery rose 1.9% to trade at $86.06 per barrel.