Global oil demand is anticipated to undergo a notably subdued growth trajectory this year, even as a surge in output from the Americas is expected to bolster supply, despite OPEC and its allies' ongoing output restrictions, as outlined by the International Energy Agency (IEA).
In its monthly report released on Thursday, the Paris-based organization maintained its projection for oil-demand growth in 2024 at 1.2 million barrels a day, a notable decline from the 2.3 million barrels a day recorded in 2023, primarily due to sluggish economic expansion. The total demand is forecasted to average 103 million barrels a day.
The IEA noted that "Global oil demand growth is losing momentum," highlighting a slowdown that commenced last year. For instance, demand growth decreased to 1.8 million barrels a day in the fourth quarter from 2.8 million barrels a day in the preceding quarter. Moreover, growth is projected to decelerate further to 1.4 million barrels a day in the first quarter and 1 million barrels a day in the second quarter of this year.
According to the IEA, demand will primarily be concentrated in China, Brazil, and India, with these major economies poised to account for nearly 80% of global growth in 2024. Meanwhile, OPEC reiterated its expectations of global oil-demand growth at 2.2 million barrels a day for this year and 1.8 million barrels a day for the following year.
Furthermore, the IEA highlighted an anticipated increase in oil supply by 1.7 million barrels a day this year, reaching an average of 103.8 million barrels a day. This represents a slight uptick from the previous forecast of 103.5 million barrels a day. In January, global oil supply experienced a sharp decline of 1.4 million barrels a day compared to December levels, primarily due to an Arctic blast that disrupted production in North America and OPEC's intensified output cuts.
Despite the extension and deepening of OPEC+ supply curbs, the IEA anticipates a modest inventory build in the first quarter, potentially helping to mitigate market volatility amid heightened geopolitical risks and persistently low global oil inventories. However, recent attacks by Ukraine on Russian refineries, though yet to impact product loadings, could substantially affect trade flows if repair works are prolonged.
The IEA's latest report follows a notable increase in crude futures in January, driven by concerns over escalating conflicts in the Middle East and disruptions to North American oil production. As of now, Brent crude, the international benchmark, is trading around $81 a barrel, while WTI, the U.S. oil gauge, hovers around $76 a barrel.