World demand will rise by 900,000 barrels per day, the adviser to industrialised countries said in a monthly report, down 70,000 bpd or 7.2% from its previous forecast, which is at the lower end of the range the industry expects.
There is a wide split in 2024 demand growth forecasts, owing to differences over China and the pace of the energy transition to cleaner fuels. The Organization of the Petroleum Exporting Countries (OPEC) also cut its 2024 forecast this week, though its view remains far higher than the IEA's.
"With the steam seemingly running out of Chinese oil demand growth, and only modest increases or declines in most other countries, current trends reinforce our expectation that global demand will plateau by the end of this decade," the IEA said.
Oil prices have dropped on concerns about global demand, with Brent crude falling this week below USD 70 a barrel to its lowest since December 2021. Brent briefly pared gains after release of the report, trading near USD 72.
China has for years driven global rises in oil consumption. The IEA has been saying that slower Chinese economic growth and a shift towards electric vehicles have changed the paradigm for the world's second-largest economy.
It now sees Chinese demand rising by 180,000 bpd in 2024 - down from 410,000 bpd seen in July - as a broader economic slowdown coincides with more EVs and as the development of a high-speed rail network restricts domestic air travel growth.
OPEC by contrast projects 2024 demand growth of a much stronger 2.03 million bpd, driven in part by a stronger Chinese expansion. The gap between OPEC and the IEA's view on 2024 growth is equal to over 1% of world demand.
In the IEA's view, demand is also under pressure in other large economies. Gasoline use in top consumer the United States has dropped year-on-year in five of the first six months of this year, it said.
"Outside of China, oil demand growth is tepid at best," the report said.
OVERSUPPLY LOOMS
The IEA left its 2025 demand growth forecast unchanged at 950,000 bpd and said the market could be oversupplied if OPEC+ unwinds output cuts as planned. OPEC sees demand growth of 1.74 million bpd in 2025.
Rising global supply is being driven by non-OPEC nations, the IEA said. The agency forecasts non-OPEC growth at 1.5 million bpd this year and next with higher production from the United States, Guyana, Canada and Brazil.
"With non-OPEC+ supply rising faster than overall demand - barring a prolonged stand-off in Libya - OPEC+ may be staring at a substantial surplus," the IEA said.
OPEC+, which includes allies such as Russia, has implemented a series of output cuts since late 2022 to support the market, most of which are in place until the end of 2025.
The group was due to start unwinding the most recent layer of cuts of 2.2 million bpd from October, but decided last week to delay the plan for two months after oil prices slumped.
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