The International Energy Agency (IEA) has updated its forecasts, indicating a continued slowdown in global oil demand growth, with a significant decline in consumption in China. This revision reflects ongoing economic challenges and shifting energy policies that are affecting global oil markets.
According to a report from News.Az, citing AFP, the Paris-based agency, noted that oil demand increased by only 710,000 barrels per day in the second quarter of the year, marking the slowest growth rate in over a year. The IEA’s monthly oil market report highlighted that oil consumption in China, previously a major driver of global oil demand growth, decreased in both April and May. Chinese demand in the second quarter was also slightly below the same period in 2023.
The IEA explained that while the demand in that quarter initially benefited from the reopening of the Chinese economy after Covid lockdowns, the recent decline indicates a more fundamental slowdown. The downturn in industrial fuel consumption suggests broader weaknesses in China’s manufacturing sector. The country is currently facing several economic challenges, including a real estate debt crisis, weakening consumer spending, an aging population, and geopolitical tensions.
In response to these factors, the IEA reduced its forecast for Chinese oil demand this year by 0.2 million barrels per day (mbd) to 17 mbd. This figure represents a gain of 0.5 mbd from 2023, but it falls significantly short of the 1.5 mbd increase seen last year. The agency also projects that Chinese demand growth will slow to 0.3 mbd in 2025, down by 0.2 mbd from its previous forecast.
The transition back to pre-Covid normalcy and weak economic growth is expected to decrease China’s contribution to global oil demand growth, dropping from around 70% of the gains last year to 40% this year and next. In contrast, emerging economies such as India and Brazil are anticipated to account for a larger share of global oil demand growth, while advanced economies in the OECD are expected to see a decline in consumption.
The IEA forecasts that global oil demand gains will average just below one mbd in 2024 and 2025, with subpar economic growth, increased efficiencies, and vehicle electrification acting as headwinds. It has trimmed its 2024 global oil demand forecast by 0.1 mbd to 103.1 mbd and its 2025 forecast by 0.2 mbd to 104.0 mbd.
Earlier this month, the IEA projected that global oil demand would stabilize at around 106 mbd by the end of the decade as demand in advanced economies declines.
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