IEA predicts oil supply will turn to deficit in 2024

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• Crude markets to shift from surplus
• Oil demand forecast to rise to 1.3m bpd
• IAE diverges from Opec prediction

Global crude markets supplies will shift from surplus into deficit in 2024, the International Energy Agency (IEA) has predicted, implying higher hydrocarbon prices.

The Paris-based watchdog raised its forecast for this year’s oil demand on Thursday on an improved outlook for the US economy and increased bunker fuel use, as attacks by the Houthis on shipping in the Red Sea have diverted more cargoes around the Cape of Good Hope.

The IEA predicted that world oil demand will grow by 1.3 million barrels per day (bpd) in 2024, up 110,000 bpd from last month’s report.

But this is down from growth of 2.3 million bpd in 2023, as efficiency gains and electric vehicles reduce use.

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“The slowdown in growth, already apparent in recent data, means that oil consumption reverts towards its historical trend after several years of volatility from the post-pandemic rebound,” the IEA said.

The IEA’s position diverges sharply from Opec’s predictions, but is close to the outlook by the US Energy Information Administration.

Earlier this week, Opec maintained its 2024 outlook for demand to grow by 2.2 million barrels a day, year on year.

The US Energy Information Administration report forecasts that demand growth will be more subdued and will rise by only 1.4 million bpd in 2024.

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On the supply side, the IEA predicts that world oil production will increase only 800,000 bpd to 102.9 million bpd, including a downward adjustment as a result of Opec+ output cuts.

Earlier this month, Opec+, led by Saudi Arabia and Russia, extended voluntary supply curbs until the end of June, pulling roughly 2 million bpd of crude out of the market.

The IEA assumes that the cuts will stay unchanged until the end of the year.

“On that basis, our balance for the year shifts from a surplus to a slight deficit,” the IEA said.

Iran, which last year ranked as the world’s second-largest source of supply growth after the US, is expected to increase production by a further 280,000 bpd this year. 

Brent traded at $84.66 per barrel on Friday, gaining nearly 5 percent in a month. WTI traded at $80.52 a barrel, marking an almost 6 percent monthly gain.

Opec ministers are due to meet in Vienna headquarters on June 1 to review market conditions.