The International Energy Agency (IEA) has revised down its 2024 world demand growth forecast by 100,000 barrels per day, citing a slowdown in global oil demand growth due to “exceptionally weak” deliveries in developed economies at the start of the year.
The rise in oil consumption continues to lose momentum, with first-quarter growth estimated at 1.6 million bpd, which is 120,000 bpd below the IEA’s previous forecast, the agency said in its latest Oil Market Report.
With most of the post-Covid rebound behind the world, global oil demand is set to grow by 1.2 million bpd this year and growth is set to further slow to 1.1 million bpd next year, the IEA said.
Just last month, the IEA had raised its 2024 outlook on global oil demand growth, by 110,000 bpd from the February report and expected demand growth at 1.3 million bpd for 2024, compared to 1.2 million bpd expected in the previous month’s report.
The IEA’s demand growth estimates are well below those of the Organisation of Petroleum Exporting Countries (OPEC), which confirmed its forecast of global oil demand growth of 2.2 million bpd for 2024, broadly unchanged from last month’s assessment.
The cartel still sees “robust growth” of 1.8 million bpd in 2025 compared to 2024, according to oilprice.com.
In other climes, global oil demand in the summer is expected to be strong as consumption of transportation fuels is set to rise across the board and across regions with summer and holiday travel picking up, OPEC said.
Also, the IEA has said that the drone attacks from Ukraine on Russian refineries could disrupt fuel markets globally, estimating that up to 600,000 barrels per day of Russia’s refinery capacity could be offline in the second quarter.
Global markets “rely on Russian exports of diesel, naphtha and jet fuel, while refining systems in Asia absorb substantial quantities of the country’s straight-run and cracked residue to boost upgrading unit feedstock,” the IEA said in the report.
The agency lowered by 160,000 bpd its forecast of global refinery throughputs this year and now sees these rising by 1 million bpd to 83.3 million bpd, due to lower Russian refinery runs, unplanned outages in Europe, and still-tepid Chinese activity.
Russian refinery outages have added to the unease in the global product market, the IEA said in the report.
In recent months, Ukraine has stepped up attacks on oil refineries in Russia, which have reduced Russian refining capacity, and which, reportedly, have the White House concerned about rising international prices.
The United States has repeatedly urged Ukraine to halt its drone attacks on Russian oil refineries due to Washington’s assessment that the strikes could lead to Russian retaliation and push up global oil prices, the Financial Times reported last month, citing sources familiar with the exchange.
According to Reuters estimates, the amount of Russian oil refining capacity that has been taken offline due to Ukrainian drone strikes is 14 per cent of Russia’s total refining capacity.
Due to refinery damage as a result of the drone attacks, Russia’s petrol production fell by 12 per cent in the last week of March compared to the February average, even though the domestic market hasn’t felt the impact yet.
