(Bloomberg) — Global oil markets face a surplus of more than 1 million barrels per day next year as Chinese demand continues to falter, pushing prices against turmoil in the Middle East and beyond, the International said. Energy Agency.
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Oil consumption in China – the engine of global markets for the past two decades – shrank for six months in a row through September and will grow at just 10% of the 2023 pace this year, the IEA said in a monthly report on Thursday. The global surplus would widen further if OPEC+ decides to press ahead with plans to revive halted production next month, the agency said.
It is possible that China’s oil demand has peaked, Toril Bosoni, head of the IEA’s oil industry and markets, said in an interview with Bloomberg TV on Thursday.
“It’s not just about the economy and the shift, the slowdown in the construction industry,” Bosoni said. “It is the transition to electric vehicles, high-speed rail and gas in freight transport that is undermining Chinese oil demand growth.”
Amid this continued weakness in Chinese demand, crude oil prices have fallen 11% since early October despite ongoing hostilities between Israel and Iran, as traders focus on growing production in America, the Paris-based IEA said . The decline portends a “well-supplied market in 2025,” it added. Brent futures traded around $72 a barrel on Thursday.
Global oil consumption will rise by 920,000 barrels per day this year – less than half the 2023 figure – to an average of 102.8 million barrels per day, the report said. Next year demand will grow by 990,000 barrels per day.
“The growth rate of less than 1 million barrels per day for both years reflects substandard global economic conditions as the post-pandemic release of pent-up demand is now complete,” the report said. “The rapid deployment of clean energy technologies is also increasingly displacing oil in transportation and energy generation.”
The agency, which advises major economies, predicted earlier this year that global demand will stop growing this decade due to a shift from fossil fuels to electric vehicles and renewable energy.
As demand growth cools, supply from producers such as the US, Brazil, Canada and Guyana will grow by 1.5 million barrels per day this year and next, the agency predicts. As a result, global supply will exceed demand by more than 1 million barrels per day next year, even if the 23-nation OPEC+ cartel abandons plans to restore production.
