PARIS: Global oil demand grew at its slowest pace since 2020 in the first half of 2024 due to China’s economic slump, the International Energy Agency said Thursday, prompting the IEA to lower its full-year forecast.
Demand increased by 800,000 barrels per day (bpd) in the first six months of 2024, compared to 2.3 million bpd over the same period in 2023, the IEA said in its monthly oil market report.
“The chief driver of this downturn is a rapidly slowing China, where consumption contracted y-o-y (year-on-year) for a fourth straight month in July,” the Paris-based agency said.
China is among the world’s top consumers and importers of oil, but the world’s second biggest economy has struggled amid weak consumer spending, a property sector crisis and high unemployment.
The IEA also cited the country’s shift away from oil in favour of alternative energy.
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Rising sales of electric vehicles are reducing demand for road fuel while the development of its vast high-speed rail network is restricting growth in domestic air travel, the IEA said.
Outside of China, it added, “oil demand is tepid at best”.
For the full year, global oil demand is forecast to grow on average by 900,000 bpd, some 70,000 bpd below the IEA’s previous estimate.
This will take total demand to almost 103 million bpd.
Oil prices have weakened this year over concerns about the global economic outlook.
This week, Brent North Sea crude, the international benchmark, fell below $70 per barrel for the first time since December 2021.
The fall in prices has prompted leading members of the OPEC+ oil cartel, including Saudi Arabia and Russia, to postpone a planned output increase and instead extend voluntary supply cuts until the end of November.
The IEA said the delay gives OPEC+ “some time to further evaluate demand prospects for next year” as well as the impact of output disruptions in Libya.
But with supply from non-OPEC+ nations rising faster than overall demand, the group “may be staring at a substantial surplus, even if its extra curbs were to remain in place”.
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