Oil Supply Increase More Than Enough to Meet Demand Growth in 2024

Oil supply increases from the Americas will be more than enough to meet demand growth this year, putting downward pressure on oil prices this year in the absence of a major geopolitical escalation in the Middle East, the International Energy Agency’s (IEA) Executive Director Fatih Birol told Bloomberg on Tuesday.    

The IEA sees global oil demand growth significantly weakening in 2024 from 2023, Birol said, adding that the agency sees consumption growing by 1.2 million barrels per day (bpd) to 1.3 million bpd this year. The weaker demand growth will be the result of slowing economic growth, including in China, and a rise in electrification of transport, the IEA’s head said.

On the supply front, growth from the Americas – driven mostly by the U.S., but also Canada, Brazil, and Guyana – will be “more than enough to meet global oil demand growth and put downward pressure on prices,” Birol told Bloomberg.

In the absence of major geopolitical turmoil, or major extreme weather events, the IEA expects a “comfortable oil market and comfortable moderate price evolution,” the agency’s executive director added.

In case geopolitical conflicts do not escalate further to threaten oil supply from the Middle East, oil prices would remain at around current levels and not stoke inflation further – which would be good news for the global economy, especially for emerging markets, Birol noted.

In its latest available monthly report for January, the IEA raised its 2024 demand growth outlook for a third consecutive month, expecting global oil demand to rise by 1.2 million bpd this year compared to 2023, easing from the 2.3 million bpd annual growth last year.

The IEA may have revised up – again – its oil demand growth forecast, but its projections are well below those of OPEC, which expects robust demand growth both this year and next. OPEC’s outlook for this year is demand to grow by 2.2 million bpd—around 1 million bpd more than the IEA expects.