- Amid changes in the Chinese economy and the rising use of electric vehicles, global oil demand growth is down sharply this year from the rates seen in recent years – a shift with important implications for oil markets and the global energy system that the International Energy Agency (IEA) analysis has been highlighting for over a year.
World oil demand is on course to increase by 900,000 barrels per day, or 0.9%, in 2024 and 950,000 barrels per day next year – down from growth of 2.1 million barrels per day, or 2.1%, in 2023, according to the IEA’s latest monthly Oil Market Report. This assessment is supported by newly available data for the first six months of 2024, which confirms the significant slowdown they have been projecting since their first forecast for 2024 was published in June 2023.
The IEA’s commentary accompanying the September Oil Market Report digs into the key factors. The recent downturn in China – the cornerstone of the growth in global oil demand so far this century – has been acute, with oil demand in July declining year‑on‑year for a fourth consecutive month. China’s overall economic growth is slowing from the rapid rates seen in previous decades. At the same time, burgeoning domestic sales of vehicles powered by alternative fuels are cutting into oil demand for road transport, while the development of a vast national high-speed rail network is constraining growth in internal air travel. Slowing construction investment amid a prolonged real estate slump is also weighing on demand.
Outside China, oil demand growth is tepid at best. This environment, combined with expectations of continued growth in supply – notably from oil producers in the Americas outside the OPEC+ group, such as the United States, Canada, Brazil and Guyana – has helped fuel a recent sell-off in oil markets. And this year’s deceleration in global oil demand may mark the start of a period of more sluggish gains in oil consumption, with major technological, behavioural and demographic shifts at work.
Read the highlights and overview from the EIA’s September Oil Market Report and the accompanying commentary. You can also watch the webinar.
Author: Bryan Groenendaal
