The International Energy Agency (IEA) has cut its 2024 oil demand growth forecast by 70,000 barrels per day (bpd), or about 7.2%, to 900,000 bpd, it said in its monthly oil market report on Thursday,

The Paris-based agency cited a slowdown in Chinese demand as the main driver of weaker global demand growth. It now expects Chinese demand to grow by only 180,000 bpd in 2024 as a broader macroeconomic slowdown coincides with a higher uptake of electric vehicles.

“With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade,” the IEA said.

Oil prices pared early gains after the release of the report.

There is a wide split in 2024 demand growth forecasts owing to differences over China and the pace of the world’s transition to cleaner fuels. The Organization of the Petroleum Exporting Countries (OPEC) also cut its 2024 forecast this week, though its view remains far higher than the IEA’s.

OPEC projects oil demand growth at 2.03 million bpd in 2024 and 1.74 million bpd in 2025, but back-to-back cuts to its forecasts also underline the challenges the producer group is facing in balancing the market.

The IEA left its 2025 demand growth forecast unchanged at about 950,000 bpd but suggested that the global oil market could be oversupplied next year if the wider OPEC+ producer group proceeds with its plan to unwind voluntary output cuts.

Rising global oil supply is being driven by higher non-OPEC output, the IEA said, with the agency forecasting non-OPEC supply growth at 1.5 million bpd for this year and next, with higher production from the United States, Guyana, Canada and Brazil.

“With non-OPEC+ supply rising faster than overall demand – barring a prolonged stand-off in Libya – OPEC+ may be staring at a substantial surplus,” the IEA said.

(Reuters)