The energy watchdog has cited a deepening manufacturing slump in wealthy states
© Getty Images/Mark Segal
The International Energy Agency (IEA) has cut its oil demand forecast for the first time this year, citing “persistent” economic headwinds in wealthy countries.
The IEA said global demand will not grow as fast in 2023 as previously expected, and will increase by 2.2 million barrels per day (bpd), or about 2%, to reach an average of 102.1 million bpd. The figure is around 220,000 barrels less than last month’s forecast.
“World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy,” the IEA stated on Thursday. “Demand in the OECD (Organization for Economic Co-operation and Development), and Europe in particular, is languishing amid a grinding slowdown in industrial activity.”
The worsening economic outlook is “especially heavy” for wealthy countries, the agency said. Demand in the EU remains restrained because of a manufacturing downturn, with wealthy economies in the OECD forecast to register four consecutive quarters of contracting demand up to the end of 2023.
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“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 IEA said.
China is set to account for 70% of demand growth as it expands petrochemical use.
For 2024, the IEA expects fuel demand growth to slow to 1.1 million bpd, “as the recovery loses momentum and as ever-greater vehicle fleet electrification and efficiency measures take hold.”
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