Increased Global Oil Supply Will Meet Growing Demand, According to IEA
The International Energy Agency stated that although OPEC and its partners have imposed output limitations, supply will still rise due to the Americas’ phenomenal output growth. Global oil consumption is predicted to expand at a much slower rate this year.
Due to sluggish economic development, the Paris-based group on Thursday maintained its prediction for oil-demand growth this year at 1.2 million barrels per day, down from 2.3 million barrels per day in 2023. It is anticipated that daily total demand will average 103 million barrels.
“The growth of the world’s oil demand is slowing down,” it stated in its monthly report. The agency reports that last year’s decline was well underway when demand growth dropped from 2.8 million barrels per day in the third quarter to 1.8 million barrels per day in the fourth. Growth is expected to slow even more this year, reaching 1.4 million barrels per day in the first quarter and 1 million barrels per day in the second.
Demand will be concentrated in China, Brazil, and India, since these three large economies are expected to contribute almost 80% of worldwide growth this year. This is similar to the patterns observed in 2018–19, when these three nations accounted for over 90% of global gains, according to the IEA.
The Organization of the Petroleum Exporting Countries said on Wednesday that it expects the demand for oil to rise globally to 2.2 million barrels per day this year and 1.8 million barrels per day the following year.
According to the IEA, growing output from non-OPEC+ nations is anticipated to contribute to an increase in oil supply of 1.7 million barrels per day this year, or 103.8 million barrels per day on average. The previous supply estimate was 103.5 million barrels per day.
According to the EIA, the global oil supply fell by 1.4 million barrels per day in January compared to December levels as OPEC and its partners tightened their output limits and an Arctic blast shut down North American production.
“A sharp decline in output in January set the year off to a difficult start, but higher global oil supply this year, led by the United States, Brazil, Guyana, and Canada, should more than eclipse the expected rise in world oil demand,” the statement read.
The IEA predicts a minor build-up in inventories in the first quarter, despite the extension and intensification of the production limitations imposed by OPEC+. This should help mitigate market volatility caused by elevated geopolitical concerns and generally low global oil stockpiles.
Although Russian crude exports remained mostly unchanged in January at about 7.7 million barrels per day, small increases in product prices helped to drive up commercial revenue to $15.7 billion, up 1.4% from the previous month. The organization stated that although product loadings have not yet been impacted by the recent attacks by Ukraine on Russian refineries, trade flows may be significantly impacted if repair efforts take a lengthy time.
The most recent assessment from the IEA was released after crude futures saw a $5 per barrel increase in January due to worries about the Middle East conflict getting worse and potential disruptions to North American oil supply.
The organization stated that “despite apparent demand weakness, global oil market balances tightened in January.” Significant supply disruptions were caused by an unprecedented Arctic freeze that swept over important oil-producing regions of the United States and Canada, coinciding with new voluntary output limitations by some OPEC+ nations.
The worldwide standard, Brent crude, is currently trading at about $81 per barrel, while the U.S. counterpart, WTI, is trading at about $76 per barrel.
