The International Energy Agency (IEA) has reduced global oil demand by 220,000 barrels per day for 2023.
The International Energy Agency (IEA) said that global oil demand will not increase as quickly as previously expected this year due to the unstable economic outlook of developed countries.
The IEA stated that world fuel consumption will increase by 2.2 million barrels per day, or about 2 percent, in 2023, which means a decrease of approximately 220,000 barrels from last month’s forecast.
Still, this level of demand means it’s on track to hit record levels later this year.
In the IEA report, “World oil demand is under the pressure of the difficult economic environment, especially due to the dramatic tightening of monetary policy. Demand in the OECD and especially in Europe is stagnating due to the slowdown in industrial activity.”
Markets were partially oversupplied this quarter, with inventories reaching their highest level in almost two years. The IEA said the Saudi supply restriction was offset by other manufacturers such as Iran and the United States.
Increases 2024 forecasts
According to the agency, given the weak demand outlook, markets will not tighten as sharply as previously thought in the coming months. But the remainder of 2023 will remain in short supply as global demand hits an all-time high at an average of 102.1 million barrels per day this year. About 70 percent of the increase in consumption will come from China, which is increasing its use of petrochemicals.
Production in the OPEC+ alliance is poised to drop by 1 million barrels per day this month, with Saudi Arabia’s production cut to its lowest level in two years. Last week, Saudi Arabia promised to extend this cut until August, while its ally Russia promised to cut exports.
The IEA increased its world consumption growth forecasts for 2024 by 290 thousand barrels on a daily basis.