IEA cuts its 2024 oil demand estimates

The International Energy Agency (IEA) yesterday cut its forecast for oil demand growth in 2024, suggesting that a tougher global economic environment and advances in energy efficiency will weigh on consumption, according to Reuters.

In its monthly report, the IEA estimates that oil demand will grow by 880,000 barrels per day (bpd) in 2024, down from a previous forecast of one million barrels per day, with the adoption of a slower rate of of electric vehicles and the difficult macroeconomic climate.

However, the Paris-based agency, which advises the United States and other industrialized countries, raised its forecast for next year's demand to 2.3 million bpd from an earlier estimate of 2.2 million. OPEC and its allies, known as OPEC+, began cutting supplies in 2022 to support prices.

Last month, the price of Brent crude reached a ten-month high after OPEC+ countries Saudi Arabia and Russia cut production by 1.3 million barrels per day until the end of the year, according to Reuters.

"If additional reductions occur in January, the balance could tilt towards surplus, which would contribute to the replenishment of depleted stocks", according to the Agency.

Although Russia has pledged to cut crude oil exports by the end of 2023, Moscow's total exports of oil and oil products rose by 460,000 bpd to 7.6 million bpd in September, according to IEA estimates.

The increase in exports highlights the difficulties faced by the West, which is trying to reduce imports of energy products from Russia and thus reduce the income of Moscow, which started a war in Ukraine last year, according to Reuters.

• Volatility in the oil market in recent days

Oil prices fell sharply last week as a worsening economic outlook fueled fears of slower demand growth. But prices rose earlier this week after the Palestinian Islamist group Hamas attacked Israel, raising fears that the widening conflict could deepen existing supply shortages, according to the media trust.

"So far there has been no direct impact on supplies," according to the IEA, which added that it is prepared to act if necessary to secure supplies. Meanwhile, the high-interest-rate environment in major Western economies meant to curb inflation, but which consequently strengthens the dollar, is dampening demand in lower-income emerging markets such as Nigeria, Pakistan and Egypt, according to the IEA. Still, at least so far, big oil consumers, especially China, India and Brazil, continue to see solid demand growth, according to the IEA report, cited by Reuters.