Global oil demand growth is losing momentum, increasing by only 1.6 million barrels per day (mb/d) in the first quarter of 2024, down 120,000 barrels per day (kb/d) from previous forecasts, due to weak deliveries in OECD countries, the International Energy Agency (IEA) said in its monthly report.
The IEA projects further deceleration in demand growth to 1.2 mb/d in 2024 and 1.1 mb/d in 2025, as the post-COVID rebound subsides and the expansion of the electric vehicle fleet, along with increased vehicle efficiencies, continue to suppress demand.
Conversely, non-OPEC+ nations, led predominantly by the United States, are poised to substantially increase global oil supply. The agency forecasts global output to rise by 770 kb/d to 102.9 mb/d in 2024. Non-OPEC+ production is expected to expand by 1.6 mb/d, while OPEC+ supply could decline by 820 kb/d if the group maintains its voluntary cuts. For 2025, global oil supply is forecast to increase further by 1.6 mb/d, with non-OPEC+ anticipated to contribute a 1.4 mb/d increase, and OPEC+ potentially boosting output by 220 kb/d, contingent on ongoing production restrictions.
Refinery throughputs globally are expected to rise by 1 mb/d to 83.3 mb/d in 2024, although this is 160 kb/d less than earlier predictions, impacted by reduced Russian output, unplanned European outages, and continued subdued activity in China. Throughputs are projected to climb by 830 kb/d to 84.2 mb/d in 2025, with non-OECD growth of 1.1 mb/d expected to offset declines in the OECD.
In inventory trends, global oil inventories increased by 43.3 million barrels in February to reach a seven-month high, with oil on water at its highest level in 15 months. Conversely, on-land stocks dropped to their lowest since at least 2016. OECD industry stocks fell by 7.6 million barrels in February, remaining 65.1 million barrels below the five-year average. Early data suggest an increase of 22 million barrels in March.
Amidst these developments, ICE Brent crude futures touched a six-month high of $90 per barrel in early April, driven by escalating Middle East tensions, attacks on Russian refineries, and the extension of OPEC+ output cuts through June. Investor sentiment has bolstered crude’s price strength, with exchange net fund positions in Brent reaching their highest in a year.
The IEA’s report underscores the shifting dynamics in the global oil market, highlighting the significant impact of geopolitical events and policy decisions on oil supply and demand.
