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Diverging Forecasts for 2024 Oil Demand Growth by IEA and OPEC Indicate Widening Gap

The Gap Widens Between Oil Forecasts as IEA Predicts Slower Demand Growth

A new report from the International Energy Agency (IEA) and OPEC reveals a growing disparity in their views on the future of oil demand growth. The IEA’s forecast indicates a sharper slowdown, while OPEC remains optimistic about China-led growth. This divergence highlights ongoing disagreements between the two organizations regarding long-term demand outlooks and the need for investment in new supplies.

IEA Lowers Forecast for 2024 Oil Demand Growth

In its monthly report, the IEA revised its prediction for oil demand growth in 2024 to 880,000 barrels per day (bpd), down from the previous estimate of 1 million bpd. This adjustment suggests that global economic conditions and progress in energy efficiency will have a more significant impact on consumption than previously anticipated.

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OPEC Sticks to Optimistic Forecast

Conversely, OPEC maintains its forecast that oil demand will rise by 2.25 million bpd in 2024. The difference between the two outlooks, amounting to 1.37 million bpd, represents more than 1% of daily global oil consumption. These contrasting perspectives have implications for oil market strength, impacting prices and fuel costs for consumers and businesses. They also influence supply policy decisions made by OPEC and its allies, known as OPEC+.

Global Economic Growth and China’s Influence

OPEC’s report emphasizes that solid global economic growth, particularly driven by China, is expected to boost oil consumption in 2024. They anticipate continued improvements in China’s economic performance. However, the IEA highlights signs of demand being affected by rising prices and increasing sales of electric vehicles. It also notes evidence of significant demand destruction in lower-income countries such as Nigeria, Pakistan, and Egypt, as well as declining oil demand within certain OECD markets like the United States.

Impact on Gasoline Demand

The IEA further predicts a decline in gasoline demand in OECD countries by 250,000 bpd in the coming year. This decrease is attributed to factors such as improved efficiencies and the growing popularity of electric cars, which reduce the need for traditional fuel sources.

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Fluctuating Forecasts and Uncertainties

Oil demand forecasts often undergo significant revisions due to changes in economic outlooks and geopolitical uncertainties. This year, factors such as China’s lifting of coronavirus lockdowns and rising interest rates have added complexity to the predictions made by both the IEA and OPEC.

It is imperative to consider these contrasting viewpoints and the various factors influencing oil demand growth when making informed decisions regarding investment, policy, and market expectations.

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