The International Energy Agency (IEA) has “responded” to the Organization of the Petroleum Exporting Countries (OPEC) statement in its monthly crude oil market report. If yesterday OPEC assured that demand for crude oil will be more stable than expected (it will grow by 2.25 million barrels per day), the IEA assured this Thursday that growth is slowing down significantly: according to the international agency, global oil demand in 2024 will grow by 1.2 million barrels per day (mb/d), which is almost half the growth of 2.3 mb/d observed in 2023.
As the IEA report explains, there will be a surplus of oil in the second, third and fourth quarters of this year, which will lead to an increase in global crude oil inventories. The OECD believes that supply will be stronger than demand for most of the year, which should keep prices in check unless some geopolitical risk arises.
OPEC is confident in oil demand
For its part, OPEC this Wednesday confirmed its forecast for strong growth in global oil demand in 2024 and, in addition, assured that in 2025 there will be a noticeable increase in oil consumption, led by China and the Middle East. some kind of surprise.
OPEC said more specifically in its monthly report that global oil demand will rise by 1.85 million barrels per day in 2025 to 106.21 million barrels per day. In 2024, OPEC recorded demand growth of 2.25 million barrels per day, unchanged from last month. However, oil prices started the year relatively weak as market uncertainty over demand offset the impact of a new round of supply cuts by OPEC and its allies, known as OPEC+. Brent, the world’s benchmark oil, is trading around $77..
“It is clear that peak oil demand does not figure into any reliable and reliable forecasts for the short to medium term,” he says. Haitham Al-Ghais, OPEC Secretary General. “It is a challenge to see oil demand peak by the end of the decade, in just six years,” the secretary of state said.
In contrast, the IEA presented a very different report, which once again highlighted the increase in crude oil supplies from the US, Brazil or Guyana, as was the case in previous months’ reports. “We forecast that global oil supplies will rise by 1.5 million barrels per day to a new high of 103.5 million barrels per day in 2024. In 2024, as last year, growth will be dominated by the Americas, led by the United States, Brazil, Guyana and Canada. “, reports the IEA.
As for demand,We expect global oil demand to halve, from 2.3 million barrels per day in 2023 to just 1.2 million barrels per day. This year, with the post-Covid recovery nearly complete, GDP growth is lagging behind trends in major economies, while energy efficiency improvements and vehicle fleet electrification are limiting oil consumption.
Risks in the Middle East
On the other hand, the IEA report notes that rising geopolitical tensions in the Middle East, which accounts for a third of global seaborne oil trade, “will leave markets on edge in early 2024” due to the risk of conflict escalation. will further disrupt the flow of oil through critical trading outlets, although the document stresses that oil and LNG production has not been affected.
“The risk of disruption to global oil supplies due to conflict in the Middle East remains high, particularly for oil flows through the Red Sea and, critically, the Suez Canal,” he adds, warning that the main alternative sea route around Africa’s Cape Good Hope is extending flights to up to two weeks, putting more strain on global supply chains and increasing freight and insurance costs.