IEA lowers 2024 oil demand forecast amid economic challenges
OIL & GAS

IEA lowers 2024 oil demand forecast amid economic challenges

The International Energy Agency (IEA) revised down its 2024 oil demand growth forecast to 880,000 barrels per day (bpd), citing harsher global economic conditions and advancements in energy efficiency, including the rapid adoption of electric vehicles. This figure marked a decrease from its earlier projection of 1 million bpd. The Paris-based agency, which advises industrialised nations including the United States, raised its 2023 demand estimate to 2.3 million bpd, up from the previous 2.2 million bpd, due to a variety of factors, including concerns about economic stability and increased usage of electric vehicles.

OPEC and its allies, collectively known as OPEC+, had implemented supply cuts in 2022 to stabilise prices. In September, global benchmark Brent reached 10-month highs following the extension of combined 1.3 million bpd cuts by Saudi Arabia and Russia until the year's end. The IEA suggested that if these additional cuts were lifted in January, it could potentially lead to a surplus, aiding in the replenishment of depleted inventories.

Despite Russia's commitment to reducing crude exports until the end of 2023, the IEA observed an increase in Moscow's total exports of crude oil and products in September, rising by 460,000 bpd to 7.6 million bpd. The surge, especially in crude exports, highlighted the challenges faced by Western nations in limiting Russian exports and revenue amid the on-going conflict with Ukraine. The IEA, in its report, also noted that while recent geopolitical events, such as the Hamas attack on Israel, raised concerns about potential supply disruptions, no direct impacts on supplies had occurred as of yet.

Looking ahead to 2024, the IEA highlighted the impact of a high-interest rate environment in key Western economies, designed to curb inflation and strengthen the US dollar. This situation dampened demand in lower-income emerging markets such as Nigeria, Pakistan, and Egypt. Despite these challenges, major oil consumers like China, India, and Brazil continued to experience robust growth in demand for oil. The IEA assured its readiness to take necessary actions to ensure adequate supplies if the need arose.

The International Energy Agency (IEA) revised down its 2024 oil demand growth forecast to 880,000 barrels per day (bpd), citing harsher global economic conditions and advancements in energy efficiency, including the rapid adoption of electric vehicles. This figure marked a decrease from its earlier projection of 1 million bpd. The Paris-based agency, which advises industrialised nations including the United States, raised its 2023 demand estimate to 2.3 million bpd, up from the previous 2.2 million bpd, due to a variety of factors, including concerns about economic stability and increased usage of electric vehicles. OPEC and its allies, collectively known as OPEC+, had implemented supply cuts in 2022 to stabilise prices. In September, global benchmark Brent reached 10-month highs following the extension of combined 1.3 million bpd cuts by Saudi Arabia and Russia until the year's end. The IEA suggested that if these additional cuts were lifted in January, it could potentially lead to a surplus, aiding in the replenishment of depleted inventories. Despite Russia's commitment to reducing crude exports until the end of 2023, the IEA observed an increase in Moscow's total exports of crude oil and products in September, rising by 460,000 bpd to 7.6 million bpd. The surge, especially in crude exports, highlighted the challenges faced by Western nations in limiting Russian exports and revenue amid the on-going conflict with Ukraine. The IEA, in its report, also noted that while recent geopolitical events, such as the Hamas attack on Israel, raised concerns about potential supply disruptions, no direct impacts on supplies had occurred as of yet. Looking ahead to 2024, the IEA highlighted the impact of a high-interest rate environment in key Western economies, designed to curb inflation and strengthen the US dollar. This situation dampened demand in lower-income emerging markets such as Nigeria, Pakistan, and Egypt. Despite these challenges, major oil consumers like China, India, and Brazil continued to experience robust growth in demand for oil. The IEA assured its readiness to take necessary actions to ensure adequate supplies if the need arose.

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