Despite concerns about economic growth with the ongoing interest rate hikes, global oil demand is still set for a record high 101.9 million barrels per day (bpd) this year, driven by a resurgent Chinese consumption, the International Energy Agency (IEA) said on Friday.
Buoyed by a resurgent China, world oil demand is set for growth of 2 million bpd this year, to hit a record 101.9 million bpd, the IEA said in its Oil Market Report for April today.
The estimate remains unchanged from last month’s report.
Yet, there will be a widening disparity between demand growth in developed economies and in emerging markets. Non-OECD countries, led by China, are set to account for nearly 90% of demand growth, the IEA noted.
OECD demand, on the other hand, has been underwhelming in recent months, and weak industrial activity and warm weather led to OECD consumption shrinking by 390,000 bpd in the first quarter of 2023 compared to the same period of 2022. The decline in Q1 2023 was the second consecutive quarter of falling demand in OECD countries.
“While oil demand in developed nations has underwhelmed in recent months, slowed by warmer weather and sluggish industrial activity, robust gains in China and other non-OECD countries are providing a strong offset,” the IEA said, keeping its upbeat outlook on Chinese oil demand growth.
Solid demand from China raised global oil demand by 810,000 bpd year-on-year in the first quarter to 100.4 million bpd.
“A much stronger increase of 2.7 mb/d is expected through year-end, propelled by a continued recovery in China and international travel,” the IEA said.
Overall, world oil demand will grow by 2 million bpd for the full year of 2023, with the non-OECD accounting for 87% of the growth and China alone making up more than half the global increase, according to the agency.
Supply could struggle to catch up with this growth, especially after the surprise OPEC+ cuts, which risk exacerbating a supply deficit expected later this year, the IEA said.
By Tsvetana Paraskova for Oilprice.com
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