The International Energy Agency (IEA) has adjusted its projection for oil demand growth, citing an increase of 110,000 barrels per day (bpd) due to disruptions in Red Sea shipping caused by Houthi attacks. Despite this adjustment, the IEA’s forecast remains significantly lower than that of the OPEC producer group.
The IEA, representing industrialised nations, anticipates that global oil demand will reach its peak by 2030 as the world transitions towards cleaner energy sources. In contrast, OPEC foresees a more gradual shift and expects oil consumption to continue rising over the next two decades.
According to the IEA’s latest monthly report released on Thursday, world oil demand is projected to increase by 1.3 million bpd in 2024. This marks a notable revision from their previous forecast in June 2023, which initially predicted a demand growth of 860,000 bpd for 2024.
Following the publication of the IEA report at 0900 GMT, oil prices, specifically Brent crude oil (LCOc1), experienced a surge of up to 80 cents per barrel, nearing the $85 mark.
While OPEC maintained its demand growth forecast at 2.25 million bpd on Tuesday, the IEA’s upward revision still places it nearly 1 million bpd behind OPEC, accounting for almost 1% of global daily demand.
The IEA highlighted dovish signals from central banks as a potential indicator of economic recovery, but expressed concerns over subdued economic indicators in China.
Global shipping disruptions, leading to increased trade via the Cape of Good Hope route, resulted in approximately 1.9 billion barrels of oil being at sea by the end of the previous month, marking one of the highest levels since the onset of the pandemic. The longer shipping routes have bolstered fuel demand, with Singapore reporting record-high levels of ship fuel loading, also known as bunkering.