Global crude oil demand for the fourth quarter of 2023, will slip to 101.7 million barrels per day. The International Energy Agency (IEA) stated in its Oil Market Report preview.
According to the agency, crude oil demand growth is slowing down. It is expected to drop from a 2.8 million barrels per day (mb/d) increase in the third quarter of 2023 to 1.9 mb/d in the fourth quarter.
This shift is due to a weaker global economic outlook.
The global oil consumption growth forecast for the last three months of 2023 has been reduced by almost 400 thousand barrels per day (kb/d), mainly because of challenges in Europe, Russia, and the Middle East. Europe’s manufacturing and industrial sectors are particularly affected.
Factors contributing to this slowdown include higher interest rates affecting the real economy, and increased petrochemical activity focused on China rather than other regions, Consequently, the projected growth in world oil demand for 2023 has been adjusted downward by 90 kb/d to 2.3 mb/d from last month’s estimation. China is responsible for 78 percent of this year’s rise.
The main reason for this adjustment is the slower growth in crude oil demand than initially anticipated in Europe, Russia, and the Middle East.
According to the IEA, the pace at which the oil demand is growing will decrease significantly, from an increase of 2.8 million b/d in the third quarter to 1.9 million b/d in the fourth quarter of this year.
Looking ahead to 2024, oil consumption growth is expected to significantly slow down to 1.1 mb/d as the effects of COVID-related disruptions on demand start to normalize.
Looking ahead to 2024, the IEA expects this crude oil demand slowdown to persist, with global demand growth halving to 1.1 million barrels per day.
This is due to factors such as slower economic growth in major countries, improvements in energy efficiency, and a rise in the use of electric vehicles, which will lessen the need for oil.
As for the 2024 forecast, the IEA adjusted its estimate by almost 100,000 b/d, predicting a demand of 102.8 million b/d.
That year’s expected oil consumption growth is projected to halve to 1.1 million b/d, which is 130,000 barrels per day higher than the previous month’s forecast. This change is attributed to the normalization of demand patterns as the distortions caused by COVID-19 fade away.
Interestingly, these adjustments come just a month after the IEA increased its projections for oil demand and supply growth in 2023 by 100,000 b/d and 200,000 b/d, respectively.
This was attributed to robust demand in China and better-than-expected oil production in the United States and Brazil.