Weaker-than-expected oil consumption in China and rising electric vehicle sales are expected to continue affecting global oil demand growth, according to Fatih Birol, head of the International Energy Agency (IEA). In an interview with Bloomberg, Birol remarked, “This year, global oil demand is very weak, much weaker than in previous years, and we anticipate this trend will continue because of one key factor — China.”
He noted that there is currently ample crude oil supply and spare production capacity worldwide. The IEA’s latest monthly outlook indicates that the oil market is likely to experience a significant surplus next year due to abundant supply and slowing demand growth. According to their Oil Market Report for October, global oil demand is projected to rise by just 862,000 barrels per day (bpd) this year, down from the previously expected growth of 903,000 bpd noted last month.
The report highlighted that Chinese oil demand is particularly weak, with consumption declining by 500 kb/d year-over-year in August, marking its fourth consecutive month of decreases. While the IEA stands ready to respond to potential supply shocks, it emphasized that, “for now, supply continues to flow,” resulting in a substantial surplus in the coming year.
Additionally, the IEA’s World Energy Outlook 2024 report suggested that OPEC has been caught off guard by the rapid growth of electric mobility in China. The agency also projected that demand for all three fossil fuels—oil, natural gas, and coal—could peak within this decade, contrasting with views from major oil producers like Saudi Arabia.
Story via Oilprice.com