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The International Energy Agency (IEA) raised its forecast for oil demand growth this year but cut estimates for global supply on lower output expectations from OPEC+ until year-end.
In its monthly report issued today, March 14, the agency upgraded its global oil growth projections by 110,000 barrels to 1.3 million barrels per day (bpd) in 2024. However, it indicated that the growth pace is slowing after it reached 2.3 million bpd last year, as demand growth returns to its historical trend while efficiency gains and the growing utilization of electric vehicles (EVs) reduce oil use.
It also stated that the average global oil demand is seen to reach 103.2 million bpd this year, a 50% increase from its 2024 growth estimates revealed last June.
Furthermore, the agency explained that the global oil market is facing a supply deficit this year, instead of the previously expected surplus, as OPEC+ appears ready to continue reducing output during the second half of the year.
IEA held OPEC+ voluntary cuts in place through 2024 – unwinding them only when such a move is confirmed by the producer alliance.
The agency indicated that raising its estimates for the growth of global demand for black gold is based on an improved outlook for the US, paired with the increased bunkering as ships takes longer routes to avoid attacks in the Red Sea.
At nearly 1.9 billion barrels as of February-end, oil on water hit its second highest level since the height of the COVID-19 pandemic, the report added.
Global oil demand is forecast to rise by a higher-than-expected 1.7 million bpd in Q1 2024, surpassing its previous estimates. This is amid global production declining by 870,000 bpd quarter-on-quarter (QoQ) during the same period due to difficult weather conditions that disrupt production, in addition to new restrictions by OPEC+.
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