The International Energy Agency (IEA) has recently released a comprehensive report indicating a foreseeable deceleration in the growth of oil demand by 2024. As of the current year, global oil consumption rates are estimated to hover around 102.2 million barrels per day, marking a 2.2 percent elevation from figures seen in 2022. However, the momentum seems to be waning as predictions suggest this growth could be decelerated to just a 1 percent uptick by 2024.
As we delve deeper into the report, several determinants emerge, elucidating this forecasted decline. The initial post-pandemic surge in demand, fueled by economic revival and industries catching up to pre-pandemic levels, is beginning to plateau. Dampened global economic conditions, coupled with stricter international efficiency regulations, are making their impacts felt in the oil industry. Significantly, the proliferation of electric vehicles, seen as a sustainable alternative to traditional fuel vehicles, is significantly influencing oil consumption patterns.
Further data from the report highlights that Saudi Arabia’s decision to curtail oil production this year played a pivotal role in escalating oil prices. As a countermeasure, the United States increased its oil production, and refineries, sensing the market’s pulse, augmented their output. This heightened production, however, has not stopped gasoline prices in the United States from inching upwards. Currently, the average gasoline price stands at $3.84 per gallon. Though this marks a 30-cent rise from the preceding month, it remains below the peaks observed last summer.
On the global front, oil prices have been on an upward trajectory. This trend is attributed to the strategic supply cuts by the OPEC+ nations, the revitalized economic sentiment post-pandemic, and an all-time high in worldwide oil demand. Adding to the industry’s challenges, unusually high temperatures have affected refinery outputs. This disruption has necessitated dipping into existing inventories to satisfy global demand.
In its conclusion, the IEA anticipates even more significant hikes in oil prices over the next year. The primary drivers behind this forecast are the continued reduction in oil outputs by key OPEC+ nations, spearheaded by Saudi Arabia. The market’s tightening landscape, combined with multifaceted variables shaping demand, has prompted the IEA to re-evaluate and adjust its projections for the growth trajectory of oil demand.
