Paris, France – World oil supply will continue to rise this year, the International Energy Agency said on Thursday, as it predicted that demand growth would continue a downward slide throughout 2024.
The Paris-based IEA, which advises oil-consuming nations, said it expects increase in global oil demand to halve from 2.3 million barrels per day (bpd) last year to 1.2 million bpd in 2024.
It cited economic headwinds, tighter efficiency standards and growth in electric vehicles for the slowing demand growth, which was sharply down in the last three months of 2023.
Much of the slowing demand has mirrored falling demand for post-pandemic travel demand in China, which drives much of the world’s oil demand growth.
The pace of demand growth will continue to be led by China through 2024, the IEA said, with the world’s second-largest economy accounting for almost 60 percent of this year’s oil demand growth.
Meanwhile, the world’s oil supply will continue to grow due to “record-setting output” from the United States, Brazil, Guyana and Canada, it said.
This high production will lead to a new high in the world’s oil supply this year, it said.
However, the IEA sounded a note of caution that conflict in the Middle East could cause serious disruptions in the market, particularly for oil flows via the Red Sea and the Suez Canal.
Some 10 percent of the world’s oil trade by sea passes trough the Suez Canal, and shipping delays add pressure to global supply chains, as well as pushing up freight costs.
The IEA warned that “a rising number of ship owners are diverting course from the Suez Canal, delaying deliveries of oil and other commodities”.
In a report earlier this week, the IEA said that the world added 50 percent more renewable energy capacity in 2023 over the previous year, but warned more is needed in the battle against climate change.