IEA cuts oil demand forecast for next year, mainly due to China

The International Energy Agency (IEA) left its oil demand growth forecast for this year unchanged, but lowered its forecast for next year. It attributed this mainly to weaker demand in China. Global consumption will increase by almost one million barrels per day this year and next, or around one percent, the agency believes. Growth is being held back by weaker economic performance and the shift from internal combustion engine cars to electric vehicles. Total demand this year could average 103.06 million barrels per day.

The agency warned that the end of China’s post-pandemic economic boom is curbing global oil demand. Advanced economies, especially the United States, which accounts for a third of global gasoline consumption, are making up for the shortfall.

The IEA expects the summer driving season in the US to be the strongest since the pandemic, putting pressure on the physical fuel market. Oil stocks are currently falling as a result, but are expected to stabilise in the final quarter of this year.

„For now, supply is struggling to keep pace with peak summer demand, pushing the market into deficit,“ the IEA said.

This is having a negative impact on global stocks, which fell by 26.2 million barrels in June.

Although the Organization of the Petroleum Exporting Countries (OPEC), together with its allies, scrapped its planned production increase, stocks are expected to rise by a substantial 920,000 barrels per day next year, according to the IEA. Rising supplies from the US, Guyana and Brazil will contribute to this.

In a separate report on Monday, OPEC lowered its estimate for oil demand growth this year, mainly due to China. However, its estimate is still more than double the growth forecast by the IEA, Bloomberg reported.