by The oil market will face a large surplus next year amid abundant supply and slowing demand growth, the International Energy Agency (IEA) said on Tuesday, further lowering its estimate of growth in demand for 2024.
Global oil demand is expected to rise by just 862,000 barrels per day (bpd) this year, amid slowing consumption growth in China, the agency said today in its closely watched report on the oil market. The latest estimate is a downward revision from the 903,000 b/d growth in global oil demand expected in last month’s report.
Demand is expected to grow by less than 1 million bpd in 2025, the IEA said, slightly raising its estimate to 998,000 bpd from 954,000 bpd.
“Chinese oil demand is particularly weak, with consumption down 500 kb/d in August – its fourth consecutive month of decline,” the agency noted.
Meanwhile, oil supply from producers outside the OPEC+ agreement is increasing and expected to make robust gains of around 1.5 million bpd this year and next. The United States, Brazil, Guyana and Canada are expected to account for the bulk of this increase, increasing their combined production by more than 1 million bpd each year, according to the IEA.
This will more than cover the expected growth in demand, according to the agency.
In recent weeks, heightened concerns about the security of oil supplies have collided with a well-supplied market, the IEA said.
“Increased concerns over security of oil supply come against the backdrop of a global market which – as we have been emphasizing for some time – appears adequately supplied,” he added in his report monthly.
Additionally, spare production capacity within OPEC+ is at historic highs, with effective spare capacity – excluding Libya, Iran and Russia – comfortably exceeding 5 million b/d in September, the agency said.
The IEA said it was prepared to act in the event of a supply shock, but noted that “for now, supply continues to flow, and in the absence of major disruption, the market is facing a significant surplus for the new year.”
Yesterday, OPEC also lowered its outlook for oil demand growth, for the third month in a row, due to actual consumption data so far this year and expectations of slightly lower demand in some regions, including China.
By Tsvetana Paraskova for Oilprice.com
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