BAKU, Azerbaijan, July 11. The International Energy Agency (IEA) forecasts global oil consumption increases of 970 kb/d in 2024, nearly unchanged from their June report, and 980 kb/d in 2025, down by 50 kb/d from the previous month's estimate, Trend reports.
These projections closely align with expected global GDP growth of around 3% annually over the next two years.
According to the latest outlook from the agency, global oil demand growth slowed significantly to just 710 kb/d in the second quarter of 2024, marking the slowest quarterly increase since the fourth quarter of 2022 during China's full lockdown period. This deceleration reflects a return to pre-pandemic growth trends, with less volatile fluctuations seen in recent years.
Geographically, there is a notable shift away from China's dominance in oil demand growth. While China accounted for 70% of global demand increases last year, this share is expected to decrease to around 40% in both 2024 and 2025. Emerging economies like India and Brazil are set to play more significant roles.
This diversification is also evident in the refined products sector, where jet fuel/kerosene's contribution to global gains is expected to drop from half last year to less than 30% in 2024. Despite the overall slowdown, second-quarter data from OECD economies showed stronger-than-expected performance. Demand for industrial fuels like gasoil and naphtha rebounded, potentially signaling a recovery in manufacturing activity impacting oil demand.
Gasoline consumption in Europe and the US has also shown resilience, with early signs from the US driving season indicating consumption levels close to those of last year. This brief uptick pushed quarterly OECD consumption growth marginally positive year-on-year in the second quarter of 2024, though a decline is anticipated in the latter half of the year, resulting in an average annual OECD demand contraction of 90 kb/d for 2024.
Conversely, non-OECD countries, particularly China, experienced weaker-than-expected oil demand growth in the second quarter of 2024, especially in industrial fuels and petrochemical feedstocks. This suggests ongoing challenges in China's manufacturing sector amid subdued domestic demand. The IEA has revised downward its 2024 demand growth forecast for China by 60 kb/d to 410 kb/d, primarily affecting gasoil and naphtha consumption.
Looking ahead, the IEA expects global oil demand growth to continue to be driven entirely by non-OECD nations, with developing countries contributing all of this year's consumption gains. In contrast, OECD demand faces structural decline due to factors like improving efficiencies and the shift toward electric vehicles. Despite some economic improvements in developed economies, the OECD's growth rate is expected to remain below 2% annually in both 2024 and 2025, significantly lagging behind non-OECD growth rates.