The International Energy Agency (IEA) maintained its 2024 global oil demand growth forecast but reduced its 2025 estimate, citing the impact of a weakened Chinese economy on consumption.
China’s sluggish growth impacts global gains
The report from the IEA, which advises industrialized countries, is the second this week to indicate that a sluggish economy is likely to curb demand in China, the world’s largest oil importer and second-biggest oil consumer.
“Subdued growth in China, following the post-Covid surge of 2023, now significantly impedes global gains,” the Paris-based energy watchdog said in its monthly oil report.
Western economies driving robust demand
While the impact of China’s post-pandemic economic rebound has faded, the IEA expects robust demand in Western economies, particularly the United States, where one-third of global gasoline is consumed.
The IEA anticipates the U.S. summer driving season to be the strongest since the pandemic, adding that supply cuts by the Organization of the Petroleum Exporting Countries and allies (OPEC+) had tightened the physical market.
For now, supply is struggling to keep up with peak summer demand, tipping the market into a deficit, the IEA noted.
Read more: OPEC raises concerns over IEA’s fossil fuel projections
Demand growth forecast revised
World oil demand will rise by 950,000 barrels per day (bpd) in 2025, the IEA said, down 30,000 bpd from the previous forecast. It left this year’s growth forecast unchanged at 970,000 bpd.
Outside the developed countries of the OECD, demand in the second quarter of this year was the slowest since the pandemic year of 2020, the IEA said.
China’s diminishing share of demand growth
China’s share of this demand growth is expected to decline to about a third in 2024, compared to just over two-thirds in 2023.
The IEA stated that the drop in China was most pronounced in gasoil and naphtha, reflecting less construction and manufacturing, and implying “a pause in the relentless expansion of the country’s petrochemical sector”.
OPEC downgrades demand forecast
OPEC on Monday cut its 2024 demand forecast for the first time since July 2023, also citing China.
Even after its downward revision, the group of oil-producing nations said world oil demand would rise by 2.11 million bpd this year, compared with the IEA’s 970,000 bpd.
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