International Energy Agency revises forecast for oil demand upward

The International Energy Agency (IEA) forecast larger oil demand in 2024 than previously projected in its monthly market report Thursday.

This year, the agency projected, global oil demand is set to grow by about 1.24 million barrels per day, up from the 1.1 million it projected in December. 

Meanwhile, the IEA also predicted overall global supply will increase at a clip of 1.5 million barrels per day in 2024 to a record high of 103.5 million barrels. An all-time high of supply driven by the U.S., Guyana and Brazil is projected to drive that growth, even as President Biden and Brazil’s President Luiz Inácio Lula da Silva have pledged to reverse their predecessors’ fossil fuel-friendly energy policies.

Demand growth for oil slackened year over year to 1.7  million barrels per day in the final quarter last year, down by nearly half from the previous two quarters, according to the IEA report. Overall, the agency projected growth this year will mark a decrease from 2.3 million barrels per day last year to 1.2 million, due to a combination of factors like electric vehicle proliferation and few if any remaining pandemic restrictions.

OPEC+ issued far more optimistic projections Wednesday, projecting demand growth for the year at 2.2 million barrels per day and 1.8 million barrels per day in 2025.

The IEA notes that rising tensions in the Middle East could disrupt markets this year, particularly attacks by Yemeni Houthi militias in the Red Sea that have sought to disrupt seaborne commerce with Israel. 

The Middle East comprises about a third of the oil trade by sea and while the Houthi attacks have yet to affect oil and liquefied natural gas production, they have increasingly led ship owners to redirect cargo away from the Red Sea, with the most common alternate trade route around the Cape of Good Hope adding as many as two weeks to the shipping process.