The International Energy Agency or IEA has reviewed
its oil demand growth forecasts for 2023 and 2024, challenging prospects of a
global economic slowdown, reported news agency Reuters.
Despite forecasts of economic deceleration, the IEA speculates
that voluntary supply cuts from Saudi Arabia and Russia, set to continue until
the end of this year, will maintain supply tightness.
The IEA recommends that while demand growth is
expected to slug, the market could shift into surplus at the beginning of 2024.
Despite an overall expectation of waning economic and oil demand growth in the
coming year, resilient US deliveries and record-breaking demand from China in
September have provided backing for 2023.
Forecasts for 2024 are underpinned by the anticipation
of interest rate cuts and recent drops in crude prices. The IEA, serving as an
energy adviser to industrialised nations, warns of potential market imbalances
and increased volatility ahead due to economic and geopolitical risks.
“For now, with demand still exceeding available
supplies heading into the Northern Hemisphere winter, market balances will
remain vulnerable to heightened economic and geopolitical risks – and further
volatility ahead,” said IEA.
It may be noted that Brent oil prices have retreated
to around $82 per barrel from their September 2023 peak near $98. Despite OPEC
supply cuts and geopolitical tensions in the Middle East, concerns about
economic growth and demand have exerted downward pressure on prices.
The IEA has adjusted its 2023 growth forecast to 2.4
million barrels per day (bpd), moving closer to OPEC’s forecast of 2.46 million
bpd. And for 2024, the IEA has raised its growth forecast to 930,000 bpd from
880,000 bpd, still below OPEC’s forecast of 2.25 million bpd.
NE Watch Desk
