World oil demand progress is slowing down sharply as financial exercise weakens in key nations, the International Energy Agency said because it slashed estimates for this quarter.
The IEA sliced almost 400,000 barrels a day from assessments of consumption progress for the ultimate three months of 2023, and continues to count on that progress charges will decelerate dramatically subsequent 12 months. In the meantime, hovering manufacturing from the US, Brazil and Guyana is offsetting manufacturing cuts by Saudi Arabia and its OPEC+ allies, it mentioned.
“Evidence of a slowdown in oil demand is mounting,” the Paris-based adviser mentioned in its month-to-month report on Thursday. “The increasingly apparent loss of oil demand growth momentum reflects the deterioration in the macroeconomic climate.”
Crude costs slumped to a five-month low beneath $73 a barrel in London earlier this week on indicators of rising oversupply. Futures have tumbled round 23% since late September as China’s financial outlook darkens whereas output swells from quite a few exporters.
Recent manufacturing cutbacks introduced by OPEC+ on Nov. 30 look set to remove a glut beforehand anticipated within the first quarter, however they arrive at a value for the cartel: the 23-nation coalition will see its share of the worldwide market whittled to the bottom degree since its formation seven years in the past, the IEA mentioned.
They’re additionally serving to to finance a “record-smashing” provide wave from the US, which is “squeezing Saudi Arabia and other core Middle Eastern producers out of prime export markets,” the report mentioned. American oil manufacturing exceeded 20 million barrels a day in September, defying predictions that value inflation would examine its progress.
“The continued rise in output and slowing demand growth will complicate efforts by key producers to defend their market share and maintain elevated oil prices,” the IEA mentioned. A big provide rebound from OPEC nation Iran can be tempering curbs by different members.
Europe, Russia and the Center East drove the company’s downgrade of fourth-quarter demand estimates. Europe was “particularly soft amid the continent’s broad manufacturing and industrial slump,” the IEA mentioned. Greater rates of interest are additionally a headwind, the company famous.
World oil demand progress stays on observe to extend by a considerable 2.3 million barrels a day this 12 months to common a file 101.7 million a day, bolstered by the remnants of the post-pandemic rebound in consumption.
But progress will gradual by roughly 50% subsequent 12 months to 1.1 million barrels a day as that rebound peters out, and shoppers flip to extra environment friendly or electrical automobiles. The rise in consumption can most likely be happy by an analogous improve in non-OPEC+ provides, the company mentioned.
Such a requirement slowdown would assist put nations on the trail agreed at COP28 climate talks within the United Arab Emirates this week, which culminated in a pledge to transition away from fossil fuels.
