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July 13 (UPI) — The International Energy Agency (IEA), based in Paris, has projected a record-breaking global crude oil demand for this year, while expressing concerns about persisting economic challenges.
The IEA expects global demand to rise by 2.2 million barrels per day (bpd) to reach 101.2 million bpd, which would be a record-setting figure if the forecast proves accurate. The major driver of this increase is China, accounting for 70% of the global demand growth, while demand in other regions remains weak.
However, the IEA report also highlights the impact of ongoing economic headwinds, particularly a deepening manufacturing slump, prompting a downward revision of the 2023 growth estimate by 220,000 bpd for the first time this year. The report can be found here.
While the U.S. economy has shown resilience against inflationary pressures, the rest of the world continues to face challenges. In May, the UK economy contracted by 0.1% after a modest 0.2% growth in the previous month, partly due to a decline in overall production.
The Central Bank of Canada recently raised its lending rate by 25 basis points, citing robust demand and a strong labor market as sources of persistent inflationary pressures.
The IEA states, “World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past 12 months.”
In Europe, demand remains sluggish due to a slowdown in industrial activity. However, the Organization of the Petroleum Exporting Countries (OPEC) economists are less pessimistic about the global economic outlook, maintaining their global growth forecast of 2.6% for this year as stated in previous reports.
OPEC predicts global oil demand to increase by 2.4 million bpd this year, which is 200,000 bpd more than the IEA’s estimate.
Looking ahead to 2024, OPEC’s monthly report for July forecasts a healthy growth of 2.2 million bpd, reaching approximately 104.25 million bpd in world oil demand.
Crude oil prices have experienced a rally in July following announcements of production restraint by Russia and Saudi Arabia. The price of Brent crude oil, the global benchmark, rose by around 1% in mid-day trading to reach $81 per barrel.
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