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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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IEA Cuts Oil Demand Growth Forecast For First Time This Year

  • Economic headwinds have forced the IEA to cut its global oil demand growth forecast by 220,000 bpd from last month’s forecast.
  • The agency highlighted a deepening manufacturing slope as being a key factor in the revised forecast.
  • While Chinese demand continues to surprise to the upside, demand in Europe is struggling amid a slowdown in industrial activity.

Persistent economic headwinds have prompted the International Energy Agency (IEA) to cut its global oil demand growth forecast for the first time this year.

The agency continues to see a record-high global oil demand in 2023, at 102.1 million barrels per day (bpd), its closely-watched Oil Market Report showed on Thursday.

However, the pace of growth in demand was lowered by 220,000 bpd from last month’s projection, the first downward revision to oil demand growth for this year from the IEA.

“Persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year,” the agency said.

Chinese demand growth continues to surprise to the upside, the IEA noted, but demand in developed economies, especially in Europe, has been languishing amid a slowdown in industrial activity. China is expected to account for 70% of the global oil demand growth this year, which is now expected at 2.2 million bpd, down from 2.4 million bpd expected a month ago.

“World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past twelve months,” the IEA said.

So far this year, global oil supply has been enough to meet demand. In June, for example, supply was just 70,000 bpd below the levels from last October before the first round of the latest OPEC+ cuts kicked in. A surge in Iranian oil production and recovering output in Kazakhstan and Nigeria ensured a well-supplied market last month, the IEA said.

But with Saudi Arabia’s additional 1 million bpd cut this month and next, supply could tumble and tighten the market, the agency added.

The “ongoing draws in oil on water and deeper supply cuts starting this month suggest the oil market may soon see renewed volatility,” the IEA concluded.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on July 13 2023 said:
    The China-led Asia-Pacific region which represent the vibrant half of the global economy with rising growth rates, minimal inflation and surging oil demand has very strong tailwinds behind it

    It is the other half which includes the United States and the EU which is facing economic headwinds and is burdened by anaemic growth rates, high level of inflation and rising interest rates.

    OPEC+’s projected rise of 2.3 million barrels a day (mbd) in global oil demand growth this year is totally accounted for by the Asia-Pacific region with China accounting for half the growth.

    Therefore, one can ignore the IEA’s cut as a ploy to depress oil prices for the benefit of its members (overwhelmingly Western).

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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