The International Energy Agency (IEA) predicts world oil demand will rise faster than expected in 2024, despite a commitment to transition away from fossil fuels. They revised their 2024 demand forecast upwards by 130,000 barrels per day (bpd), citing an improved economic outlook in the US and lower oil prices.

However, the IEA also downgraded its global demand growth forecast for the current quarter due to a worsening economic outlook. They cut the forecast by almost 400,000 bpd to 1.93 million bpd, with Europe, Russia, and the Middle East bearing the brunt of the adjustment.

Oil prices have weakened recently, even after OPEC+ announced production cuts for the first quarter of 2024. However, they rebounded after the IEA report was released.

The IEA also trimmed its forecast for oil demand growth in 2023 by 90,000 bpd to 2.3 million bpd. They attribute this to slower economic growth, efficiency improvements, and a growing electric vehicle fleet.

The IEA expects non-Opec+ supply to rise by 1.2 million bpd in 2024, down from this year’s 2.2 million bpd growth. This, combined with the slowdown in demand, could challenge OPEC+’s efforts to maintain market share and high oil prices.

The IEA forecasts the global demand for OPEC crude plus withdrawals from stocks will average 28.2 million bpd in 2024 and dip to 27.7 million bpd in the first half. They estimate OPEC pumped 28.1 million bpd in November, exceeding the demand they expect for OPEC crude in the first half of next year.

Opec maintains a more optimistic outlook, keeping its forecast for world oil demand growth in 2023 unchanged at 2.46 million bpd and revising its 2024 forecast slightly upwards to 2.25 million bpd. However, the gap between the IEA and Opec 2024 demand forecasts remains significant, at 1.15 million bpd.

Oil demand forecasts are often subject to revisions due to changes in the economic outlook and geopolitical uncertainties. This year was no exception, with China’s lifting of coronavirus lockdowns and rising interest rates impacting the market significantly.