IEA expects a slowdown in global oil demand growth and a decline in consumption in China

The International Energy Agency lowered its forecasts on Thursday and said that growth in global oil demand continues to slow and that consumption in China has declined.

The Paris-based authority, which advises industrialized countries on energy policies, said that demand for oil increased by only 710,000 barrels per day in the second quarter, the slowest rate in more than a year.

Its monthly report on the oil market stated that “oil consumption in China, the long-standing driver of global oil demand growth, contracted in April and May.”

Chinese demand in the second quarter was also marginally lower compared to the period from 2023.

While demand in this period benefited from the reopening of the Chinese economy after lockdowns related to the Covid pandemic, the IEA said that the recent decline “also indicates a fundamental slowdown” and that “the decline in industrial fuels indicates broader weakness in manufacturing.”

The world’s second-largest economy is facing a mortgage debt crisis, weak consumption, an aging population and geopolitical tensions abroad.

The agency reduced its forecast for Chinese oil demand this year by 0.2 million barrels per day to 17 million barrels per day. Although this would represent an increase of 0.5 million barrels per day from 2023, it is much less than the increase of 1.5 million barrels per day last year.

The agency expects Chinese demand growth to slow to 0.3 million barrels per day in 2025, which is also a decrease of 0.2 million barrels per day from its previous forecast.

A return to the normality that existed before Covid and weak growth will see China’s size in the increase in global oil demand decrease, as it will represent only 40% of this increase in 2024 and 2025, compared to about 70% last year, according to the International Energy Agency. .

Emerging economies such as India and Brazil will account for a larger share of global oil demand growth, while advanced economies in the OECD will see a decline in consumption.

“The global rate of increase is expected to reach slightly less than one million barrels per day in 2024 and 2025, while substandard economic growth, increasing efficiency, and electric vehicles are headwinds,” the agency said.

The agency reduced its forecast for global oil demand for 2024 by 0.1 million barrels per day to 103.1 million barrels per day and its forecast for 2025 by 0.2 million barrels per day to 104.0 million barrels per day.

Earlier this month, the agency said it expected global oil demand to stabilize at approximately 106 million barrels per day by the end of the decade, with demand in advanced economies declining.