IEA trims forecasts as demand for oil slows

Global demand for oil is slowing "sharply", the International Energy Agency said on Thursday, as it trimmed annual growth forecasts.

The Paris-based body said demand rose by 800,000 barrels per day (bpd) year-on-year in the first half of 2024, significantly lower than the 2.3m bpd recorded in 2023. It was also the lowest since 2020.

As a result, the IEA now expects global oil demand to reach 900,000 bpd in 2024 - a cut of 70,000 bpd on its July forecast - and 950,000 bpd in 2025, down 30,000 bpd.

The IEA said the "chief driver" of the downturn in demand was China, which has struggled to regain economic momentum since the pandemic.

"The recent slowdown in China has seen its oil consumption declining year-on-year for a fourth consecutive month in July, by 280,000 bpd," it noted. "This stands in marked contrast to the 1m bpd average pace of growth over the preceding 12 months.

"The country’s oil demand is now set to expand by only 180,000 bpd, as the broad-based economic slowdown and an accelerating substitution away from oil in favour of alternative fuels weight on consumption."

The monthly oil market report also reiterated the IEA’s belief that global demand will plateau by the end of this decade, as the green energy transition gains traction.

In June, it warned in its annual report that the world was facing a "staggering" oil surplus by 2030 as output outstrips slowing demand.

Thursday’s forecast comes on the back of falling oil prices. Brent crude reached a near three-year low on Thursday, when it dipped below $70 per barrel. In August it was trading above $80.

As at 1015 BST, Brent was trading at $71.32 a barrel and West Texas Intermediate at $68.03.