The International Energy Agency (IEA) has revised its forecast for oil demand growth and revealed that oil demand is expected to increase by approximately 1.3 million barrels per day in 2024.
With Houthi attacks disrupting Red Sea shipping, the agency on Thursday raised its outlook for oil demand growth in 2024 for the fourth time since November, but producer group Petroleum Export Organization ( Not as bullish as OPEC).
OPEC and the IEA, leading industrialized countries, have been at odds in recent years over issues such as the long-term outlook for oil demand and the need to invest in new supplies.
Global oil demand will rise by 1.3 million barrels per day in 2024, an increase of 110,000 barrels per day from last month, the IEA said in its latest report. With OPEC+ member countries extending production cuts, the country is expected to see a slight supply shortage this year instead of the previous surplus. After the release of the IEA report, Brent crude rose as much as 80 cents towards $85 a barrel, its highest since November.
“It's a fairly bullish report with demand growth revised upwards and supply growth forecasts revised downwards,” UBS analyst Giovanni Staunovo said. The IEA originally projected demand growth in 2024 of 860,000 barrels per day as of June 2023. Demand reportedly increased by 2.3 million barrels per day last year.
“The slowdown in growth already evident in recent data means oil consumption has returned to historical trends after several years of fluctuations since the post-pandemic recovery,” the IEA said.
OPEC on Tuesday kept its demand growth forecast unchanged at 2.25 million barrels per day. This means OPEC and the IEA are still nearly 1 million barrels a day apart, equivalent to almost 1% of global daily demand.
The IEA said dovish signals from central banks suggested the economy was moving out of the doldrums, but China's lackluster economic data remained a concern.
Shipping disruptions in the Red Sea region have increased trade on the long-distance route around the Cape of Good Hope, increasing the number of barrels at sea to nearly 1.9 billion barrels at the end of February, according to the IEA.
Longer shipping routes have increased demand for fuel, and the amount of fuel loaded, or bunkered, on ships in Singapore has reached an all-time high.
The IEA believes challenges to shipping will provide a short-term tailwind, but the still uncertain economic outlook will weigh on demand, the agency said.
The IEA said growth will continue to be heavily skewed towards non-OECD countries, even as China's advantage gradually fades. China's demand growth is expected to slow from 1.7 million barrels per day to 620,000 barrels per day in 2023.
On the supply side, the IEA said growth in non-OPEC+ countries will continue to significantly outpace oil demand growth in 2024, although the balance is tightening due to extended production cuts by some OPEC+ countries.
Earlier this month, some OPEC+ countries extended voluntary cuts made in the first quarter until the end of June. The IEA said it would treat these production cuts as being in place for the entire year and would only lift them if OPEC+ approved the move.
“With this in mind, this year's balance of payments will move from a surplus to a slight deficit, but there may be some relief for oil tanks as a large amount of floating oil reaches its final destination,” the official said.
Meanwhile, new analysis from the International Energy Agency (IEA) shows strong signs that methane emissions could soon fall due to new commitments stemming from the COP28 climate change summit in Dubai. .
Methane emissions from the energy sector remained near record highs in 2023, with substantial policies and regulations announced in recent months to address the challenge.
The latest update to the IEA's Global Methane Tracker is the first comprehensive assessment of global methane emissions since the COP28 climate summit concluded in December.
Fossil fuel production and use will emit nearly 120 million tonnes of methane in 2023, a slight increase compared to 2022, according to a new IEA analysis. Another 10 million tons of methane emissions come from bioenergy, most of which comes from conventional energy use. Biomass used for activities such as cooking.
According to the report, the top 10 emitters will be responsible for around 80 million tonnes of methane emissions from fossil fuels in 2023, equivalent to two-thirds of the world's total. The United States, the world's largest oil and gas producer, is also the largest emitter from oil and gas operations, closely followed by Russia. China is by far the largest emitter in the coal sector.
The satellite continues to further focus on the world's understanding of methane emissions and their sources.
