The International Energy Agency (IEA) announced on Tuesday that the oil market will see a substantial surplus next year. This situation arises from high supply levels and a slowdown in demand growth. The agency has revised its demand growth forecast for 2024 downwards.
According to the IEA’s latest Oil Market Report, global oil demand is expected to increase by only 862,000 barrels per day (bpd) this year. This is a decrease from last month’s projection of a 903,000 bpd rise. The slowdown is particularly pronounced in China, where oil consumption has decelerated.
For 2025, demand growth is projected to remain below 1 million bpd. The IEA has slightly adjusted its estimate upward to 998,000 bpd from a previous 954,000 bpd.
The report highlighted that Chinese oil demand is notably weak. In August, consumption fell by 500,000 bpd compared to the same month last year. This marks the fourth month of consecutive declines.
On the supply side, production from countries outside the OPEC+ agreement is expected to increase significantly. The IEA forecasts a rise of around 1.5 million bpd in 2023 and 2024, primarily driven by the United States, Brazil, Guyana, and Canada. These countries are anticipated to boost their combined production by over 1 million bpd in both years.
This increase in supply is likely to exceed the expected growth in demand, according to the agency. The IEA noted that recent concerns about oil supply security contrast sharply with the current well-supplied market.
“Concerns about oil supply security are set against a backdrop of a global market that – as we have highlighted for some time – looks adequately supplied,” the agency stated in its monthly report.
Additionally, OPEC+ has a historic amount of spare production capacity. As of September, effective spare capacity—excluding Libya, Iran, and Russia—exceeded 5 million bpd.
The IEA confirmed its readiness to respond to any supply disruptions but emphasized that, for now, “supply keeps flowing.” It concluded that, without a significant disruption, the market will face a considerable surplus in the coming year.
In related news, OPEC has also revised its oil demand growth outlook downward for the third consecutive month, attributing this change to actual consumption data and expectations of slightly lower demand in some regions, particularly China.
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