The surplus may present a buffer for costs towards potential supply-side value shocks from conflicts in West Asia and different areas
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Global oil markets are anticipated to face a surplus of greater than 1 million barrels a day subsequent yr as demand in China continues to lag, based on the International Energy Agency (IEA).
In its month-to-month report launched Thursday (November 14), the IEA famous that oil consumption in China– traditionally a major driver of worldwide oil demand— has contracted for six consecutive months via September.
Growth in China’s oil demand this yr is projected at simply 10 per cent of the tempo seen in 2023, the company mentioned.
China’s slowing oil demand
IEA’s Head of Oil Industry and Markets, Toril Bosoni, advised that China’s oil demand might have already peaked, citing shifts in financial exercise and transportation. “It’s not just the economy and the slowdown in construction,” Bosoni instructed Bloomberg TV.
“The adoption of electric vehicles, high-speed rail, and gas-fueled trucking is eroding Chinese oil demand growth.”
Brent crude futures have been buying and selling close to $72 a barrel on Thursday.
The IEA forecasts that world oil demand will develop by 920,000 barrels per day this yr, down from the fast post-pandemic restoration fee seen in 2023.
For 2024, development is predicted to tick up barely, with demand rising by 990,000 barrels per day to common 102.8 million barrels per day.
According to the IEA, the sub-1 million barrel every day development for each 2023 and 2024 not solely exhibits lackluster world financial situations, but in addition a shift towards clear vitality in transportation and energy sectors.
Earlier this yr, the company predicted that world oil demand would plateau this decade as electrical automobiles and renewable vitality proceed to displace fossil gasoline, Bloomberg reported.
Crude oil value anticipated to be steady
While demand development slows, oil output from non-Opec international locations, together with the United States, Brazil, Canada, and Guyana, is projected to extend by 1.5 million barrels per day over the subsequent two years.
This growth is predicted to maintain world provides forward of demand by greater than 1 million barrels per day in 2024, even when the Opec+ coalition resumes manufacturing will increase.
The surplus may present a buffer for costs towards potential shocks from conflicts in West Asia and different areas.
Crude costs have declined by 11 per cent since early October regardless of ongoing hostilities in West Asia, as markets weigh growing manufacturing from the Americas, the IEA reported.