IEA and Opec move further apart on global oil demand

Jose Bula/Alamy via Reuters

• IEA predicts weaker demand than Opec
• Crude prices down 8% in a month
• Next Opec meeting in June

The division between the International Energy Agency and oil producers’ group Opec has deepened as the Paris-based energy watchdog once again curtailed its oil demand outlook for 2024, amid softer macro sentiment.

In its monthly report, the IEA forecast on Wednesday that world fuel demand will grow by 1.1 million barrels per day (bpd) this year, down 140,000 bpd from its previous outlook a month ago. The forecast reflects a first-quarter demand contraction in OECD countries, notably in Europe. 

Earlier this week Opec kept its outlook unchanged at 2.2 million bpd this year.

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“Poor industrial activity and another mild winter have sapped gas oil consumption this year, particularly in Europe, where a declining share of diesel cars in the fleet was already undercutting consumption,” the IEA said.

“Combined with weak diesel deliveries in the United States at the start of the year, this was enough to tip OECD oil demand in the first quarter back into contraction.“

The two are closer in their predictions for 2025. 

IEA’s outlook for next year remained the same at 1.2 million bpd, while Opec kept its forecast at 1.8 million bpd in 2025.

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Brent prices were stable Thursday morning at $83.05 per barrel, while West Texas Intermediate traded at $78.95 per barrel.

Crude prices have lost around 8 percent in a month, correcting sharply throughout April and early May, “as concerns over the health of the global economy and oil demand fuelled a sell-off”, added the IEA.

“Reports of progress towards a truce in Gaza also weighed on oil prices, although geopolitical tensions remain high.”

Assuming that voluntary cuts in the broader Opec+ group are maintained, the IEA expects world oil supply to increase by 580,000 bpd this year to a record 102.7 million bpd as non-Opec production rises by 1.4 million bpd, while Opec+ output falls by 840,000 bpd.

Opec+ ministers will meet on June 1 to discuss the health of oil demand and their further output policy. They may also examine global oil inventories as a gauge for balancing world crude demand and supply.