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The International Energy Agency (IEA) has cut its 2024 oil demand growth forecast by 70,000 barrels per day (bpd), lowering the estimate to 900,000 bpd due to a slowdown in Chinese demand and increased electric vehicle adoption. In contrast, OPEC projects higher demand growth of 2.03 million bpd for 2024 but has made consecutive downward revisions, reflecting the challenges of balancing the market. Rising non-OPEC supply from countries like the U.S., Guyana, and Brazil is expected to add 1.5 million bpd in both 2023 and 2024. The IEA warned that OPEC+ could face a substantial supply surplus next year if voluntary output cuts are reversed.

Key Highlights

* IEA cuts 2024 oil demand growth forecast by 70,000 bpd, citing China's slowdown.

* OPEC projects higher demand growth but faces back-to-back cuts in forecasts.

* Global oil supply rises with higher production from non-OPEC countries like the US, Guyana, and Brazil.

* China’s demand growth slows to 180,000 bpd due to macroeconomic challenges and EV uptake.

* OPEC+ may face surplus risks as non-OPEC supply outpaces demand growth.

The International Energy Agency (IEA) has revised its 2024 oil demand growth forecast downward by 70,000 barrels per day (bpd), reducing the estimate to 900,000 bpd. This adjustment, representing a 7.2% reduction, is primarily driven by the slowdown in Chinese demand. China, the world's largest oil importer, is expected to see its demand grow by only 180,000 bpd next year due to macroeconomic challenges and the rising adoption of electric vehicles (EVs).

Despite OPEC projecting higher demand growth at 2.03 million bpd for 2024, the group has faced consecutive cuts to its forecasts, signaling difficulties in balancing the market. As OPEC+ seeks to navigate these shifts, the IEA highlights the rising risk of a supply surplus, particularly with non-OPEC nations like the U.S., Guyana, Canada, and Brazil significantly increasing their production. Non-OPEC supply growth is forecast at 1.5 million bpd for both 2023 and 2024, further intensifying the pressure on OPEC+ to manage output effectively.

Additionally, the IEA cautioned that should OPEC+ proceed with unwinding voluntary output cuts, the oil market could face oversupply next year. With non-OPEC production rising faster than global demand, the potential for a substantial surplus looms large, barring unforeseen disruptions such as a prolonged stand-off in Libya.

Finally

The IEA’s forecast revision signals growing supply risks, with OPEC+ facing challenges as non-OPEC output continues to outpace demand growth.

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