IEA Optimistic About Oil Demand Growth Despite Economic Challenges
Despite the anticipated deceleration in economic growth across major nations, the IEA remains optimistic. The voluntary supply cuts from Saudi Arabia and Russia until the end of the year are expected to maintain a tight supply, though demand growth is foreseen to slow. However, a potential market shift into surplus is predicted at the beginning of 2024, according to the Paris-based IEA.
Reuters
LONDON: The International Energy Agency (IEA) announced on Tuesday an upward revision to its oil demand growth projections for both this year and the next, defying expectations of a looming economic slowdown in major economies worldwide.
The IEA highlighted that, while overall economic and oil demand growth are expected to lose momentum in the upcoming year, the robust delivery performance in the United States and China's record demand in September have supported 2023's demand outlook. The outlook for 2024 is bolstered by expectations of interest rate cuts and the recent decline in crude prices, according to the IEA, which serves as the energy adviser to industrialized nations.
The report emphasized,
"For now, with demand still exceeding available supplies heading into the Northern Hemisphere winter, market balances will remain vulnerable to heightened economic and geopolitical risks – and further volatility ahead."
Despite Brent oil prices softening to around $82 a barrel from their September 2023 peak near $98, concerns about economic growth and demand continue to weigh on prices. This is occurring despite the supportive measures of supply cuts by OPEC and its allies, along with ongoing conflicts in the Middle East.
Looking specifically at the growth forecasts, the IEA increased its projection for 2023 to 2.4 million barrels per day (bpd) from the previous estimate of 2.3 million bpd, approaching OPEC's forecast of 2.46 million bpd. For 2024, the IEA raised its growth forecast to 930,000 bpd from the earlier estimate of 880,000 bpd, though it remains notably below OPEC's more optimistic projection of 2.25 million bpd.
