Global oil demand growth to remain below 1 million b/d in near future: IEA’s Birol

Global oil demand growth will likely remain below 1 million b/d in the near future largely because of a slowdown in China’s economy, International Energy Association executive director Fatih Birol said Sept. 23.

“In the last 10 years more than 60% of global oil demand growth came from China only,” Birol said at a Council for Foreign Relations event.

“And now everybody agrees China’s economy is slowing down to about 4% a year,” he said.

In the next few years “I believe under normal conditions oil demand growth will be on the slow side,” Birol said. “The numbers we have seen in the past – 2 million b/d, 1.5 [million b/d] – these are passe. Over.”

The IEA has cut its global oil demand growth estimate for 2024 several times this year, from 1.24 million b/d in January. Most recently, on Sept. 12 the IEA cut its demand outlook by 60,000 b/d to 910,000 b/d, although it maintained its 2025 estimate at 950,000 b/d.

Production growth continues to outpace the rise in demand, which is helping to keep a lid on oil prices despite the loss of barrels from Libya and geopolitical turmoil in the Middle East, Birol said.

Crude oil futures settled lower Sept. 23 as weakening economic outlooks outweighed rising geopolitical risk premiums.

NYMEX November WTI settled 63 cents lower at $70.37/b, with sentiment cooling following a spate of tepid manufacturing data in the US and Europe.

Output growth is being driven primarily by the “American quartet” – the US, Canada, Brazil and Guyana, Birol said.

Non-OPEC crude production is growing this year, with S&P Global Commodity Insights analysts expecting output to rise 1.55 million b/d between 3Q 2024 and 1Q 2025.

“Canada is leading global growth over this period,” the analysts said in a report, pointing to an expected increase of 315,000 b/d by 1Q 2025. “Oil sands mines are ramping up out of 2Q 2024 maintenance, and at the same time, debottlenecking initiatives are beginning to add new volumes.”
Source: Platts