The International Energy Agency (IEA) has recently reduced its forecast for global oil demand growth in 2024, primarily due to persistent weakness in China. Meanwhile, crude oil futures experienced a downward trend during intraday trading, following reports that Israel does not plan to target Iranian oil facilities. Currently, world oil demand is anticipated to rise "just shy" of 900,000 barrels per day this year, a decline from the IEA's previous growth projection of 900,000 barrels issued last month.
For 2025, the agency predicts demand growth to be "close to" 1 million barrels per day, reevaluating its earlier projection of 950,000 barrels. Notably, China's demand is deemed "particularly weak," with consumption dropping by 500,000 barrels per day in August compared to the previous year—marking the fourth consecutive decline, according to the IEA’s analysis.
The report forecasts that the demand from China will contribute nearly 20% to global demand increases in both 2024 and 2025, a stark decrease from about 70% in the previous year. Additionally, on Monday, the Organization of the Petroleum Exporting Countries (OPEC) adjusted its global oil demand projections for 2024 and 2025 downwards while maintaining steady supply estimates. The IEA indicated that oil supply from non-OPEC countries, as well as those not aligned with OPEC+, is anticipated to show significant growth of approximately 1.5 million barrels daily in both 2024 and 2025. On Tuesday afternoon, West Texas Intermediate crude oil was observed down 4.6% at $70.45 per barrel, while Brent crude fell 4.3% to $74.11.
Last month, Brent futures fell to multiyear lows due to market expectations of an "amply supplied" atmosphere in 2025; however, they have since rebounded in early October amidst escalating geopolitical tensions in the Middle East. The IEA reported that Iran conducted a missile strike against Israel recently, a move perceived as retaliation for Israel’s actions against Hezbollah leader Hassan Nasrallah and an Iranian military commander in Lebanon. Israeli Prime Minister Benjamin Netanyahu communicated to the US government that Israel has no plans to attack Iran’s oil or nuclear facilities.
The Washington Post cited two officials familiar with the situation who confirmed this development on Monday. Israel remains open to engaging against Iranian military targets. The White House has not provided an immediate comment regarding these matters. The IEA noted that Israel's commitment to refrain from targeting crude oil and nuclear facilities in Iran has alleviated substantial pressure on the oil market in the short run.
"Recent resolutions of political issues in Libya, which had briefly halved its oil exports, along with relatively minor production disruptions from major hurricanes affecting the US Gulf Coast and subdued end-user demand have contributed to the stabilization of oil markets," stated the IEA in their report..