The International Energy Agency (IEA) has projected an enduring slowdown in oil demand until 2024, a viewpoint that starkly clashes with the optimistic forecasts of the Organization of the Petroleum Exporting Countries (OPEC).
What Happened: As reported by CNBC on Thursday, the IEA perceives a softening global oil demand, predicting this trend to persist into 2024. The stance is strikingly different from that of OPEC and its affiliates, collectively referred to as OPEC+.
The IEA has observed a “decidedly bearish” sentiment in the oil market in recent weeks, despite OPEC+’s November 30 announcement of voluntary production cuts in the first quarter of the upcoming year.
In its latest monthly oil market report, the IEA anticipates global oil demand to increase by 2.3 million barrels per day to 101.7 million barrels per day in 2023. Nonetheless, it cautions that this forecast “masks the impact of a further weakening of the macroeconomic climate.”
The IEA projects a halving of oil consumption growth next year, reducing to 1.1 million barrels per day as global economic growth remains subpar in major economies and Covid-19-related distortions diminish.
On the other hand, OPEC, in its most recent monthly report, expressed “cautious optimism” about oil market dynamics in 2024 and sustained its relatively high oil usage forecast for the coming year.
Why It Matters: The IEA’s warnings of a continual oil demand slowdown come on the heels of the COP28 climate summit’s landmark agreement to transition from fossil fuels and enhance commitments to renewable energy sources. The decision has placed oil prices under pressure.
On Wednesday, crude oil prices were trading under strain while the United States Oil Fund USO, an ETF tracking the price of light sweet crude, was down 0.2% in pre-market trade following a 3.8% loss on Tuesday.
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