IEA predicted oil demand for the next five years

The International Energy Agency (IEA), in its monthly review released yesterday, significantly increased its forecast for oil demand in 2023 by 240,000 barrels per day (b/d) to 2.45 million b/d. As a result, the IEA now expects global oil consumption to reach 102.3 million barrels per day this year (2022 ended with an average demand of 99.8 million b/d). The agency’s forecast for this year is increased primarily due to the growth in oil demand from China, in which in April it reached a record level of 16.3 million b/d. The counter world oil supply, according to the IEA, in 2023 will be a record 101.3 million barrels per day, and in 2024 it will grow to 102.3 million bpd.

Note that, judging by the medium-term expectations of the IEA released yesterday, due to the end of the period of post-pandemic economic recovery, the not quite favorable macroeconomic climate and plans to switch to cleaner fuels, the global growth rate of oil consumption will further slow down significantly. Yesterday, the IEA gave the first forecast of world oil demand in 2024 – 103.1 million barrels per day. Thus, the growth rate relative to this year will fall three times – to 0.8 million bpd. In 2025, demand, according to agency expectations, will grow by 1 million b/d, in 2026 – 0.7 million b/d, in 2027 – 0.5 million b/d, in 2028 – 0 .4 million bpd (up to 105.7 million barrels per day).

The head of the IEA, Fatih Birol, believes that the peak of demand may be passed before the end of this decade, as the number of electric vehicles increases, the energy efficiency of industries increases and other technologies are introduced. In the meantime, we note that the agency’s forecast, expressed not in general terms, but in numbers, assumes an increase in consumption throughout the forecast five-year period – oil demand will be supported by steadily growing petrochemicals and air transportation.

In the meantime, short-term market participants are catching signals from regulators, trying to understand how oil demand will change depending on the health of the largest economies in the short term. While the pause in key rate hikes taken by the Fed on Wednesday (see the text next to it) was expected, Brent and WTI oil benchmarks reacted to the cut in the short-term lending rate announced by the Central Bank of China on Tuesday with more than three percent growth.

Vadim Visloguzov