The International Energy Agency(IEA) has reviewed its oil demand growth projections, disclosing a rise of about 1.3 million barrels a daily in 2024 is expected.
The agency, on Thursday, raised its view on 2024 oil demand growth for a fourth time since November as Houthi attacks disrupt Red Sea shipping, though it remains far less bullish than producer group the Organisation of the Petroleum-Exporting(OPEC).
The OPEC and the IEA, which represents industrialised countries, have clashed in recent years over issues such as the long-term oil demand outlook and the need for investment in new supply.
World oil demand will rise by 1.3 million bpd in 2024, the IEA said in its latest report, up 110,000 bpd from last month. It forecast a slight supply deficit this year after OPEC+ members extended cuts, from a surplus previously. Brent crude oil rose as much as 80 cents a barrel towards $85 after the IEA report was released, touching its highest since November.
“Quite a bullish report, with upward revisions on demand growth, and lower supply growth estimates,” said UBS analyst, Giovanni Staunovo. The IEA had initially forecast 2024 demand growth of 860,000 bpd in June 2023. Last year demand reportedly rose by 2.3 million bpd.
“The slowdown in growth, already apparent in recent data, means that oil consumption reverts towards its historical trend after several years of volatility from the post-pandemic rebound,” the IEA said.
The OPEC on Tuesday kept its demand growth forecast unchanged at 2.25 million bpd, meaning the views of OPEC and IEA remain nearly 1 million bpd apart, representing almost 1% of daily world demand.
Dovish signals from central banks indicated a path out of economic doldrums, the IEA said, but subdued economic data in China remains a concern.
Disruptions to shipping in the Red Sea region have forced more trade on to the longer route around the Cape of Good Hope, pushing up the number of barrels at sea to nearly 1.9 billion as of the end of February, the IEA said.
Longer routes boosted fuel demand and the loading of ships with fuel, or bunkering, in Singapore reached all-time highs.
The IEA still thinks the cloudy economic outlook will weigh on demand, the agency noted, even as the challenges to shipping provide a short-term boost.
Growth will continue to be heavily skewed towards non-OECD countries, even as China’s dominance gradually fades, the IEA said. It expects China’s demand growth to slow to 620,000 bpd from 1.7 million bpd in 2023.
On the supply side, the IEA said growth from non-OPEC+ countries would continue to significantly eclipse oil demand expansion in 2024, although extended cuts by some OPEC+ members had tightened the balance.
Some OPEC+ members earlier this month extended voluntary cuts made in the first quarter until the end of June. The IEA said it was treating those cuts as being in place for the whole year, unwinding them only once OPEC+ confirms the move.
“On that basis, our balance for the year shifts from a surplus to a slight deficit, but oil tanks may get some relief as the massive volumes of oil on water reach their final destination,” the agency said.
Meanwhile, there are strong indications that fresh pledges stemming from the COP28 climate summit in Dubai, have the potential to put Methane emissions into decline soon, according to new analysis from the International Energy Agency (IEA).
Methane emissions from the energy sector remained near a record high in 2023 – but substantial policies and regulations announced in recent months, are set to address the challenges.
The IEA’s latest update of its Global Methane Tracker is the first comprehensive assessment of global methane emissions since the COP28 climate summit concluded in December.
The new IEA analysis finds that the production and use of fossil fuels resulted in close to 120 million tonnes of methane emissions in 2023, a small rise compared with 2022. Another 10 million tonnes of methane emissions came from bioenergy, mostly from the traditional use of biomass for activities such as cooking.
According to the report, the top 10 emitting countries were responsible for around 80 million tonnes of methane emissions from fossil fuels in 2023, two-thirds of the global total. The United States – the largest global producer of oil and gas – is also the largest emitter from oil and gas operations, closely followed by Russia. China is by far the highest emitter in the coal sector.
Satellites continue to bring the world’s understanding of methane emissions and their sources into sharper focus.
