1 of 2 | The International Energy Agency sees demand for crude oil reaching a record level this year, though it was careful to not the broad-based economic woes could throttle momentum. File photo by A.J. Sisco/UPI |
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July 13 (UPI) -- The Paris-based International Energy Agency said Thursday it expects global crude oil demand to hit a record this year, though it was careful to add it was concerned about "persistent" economic woes.
The IEA said it expects global demand to increase by 2.2 million barrels per day this year to reach 101.2 million bpd, which would be a record if the forecast proves accurate. China accounts for 70% of the increase in global demand, while the appetite elsewhere is "anemic."
"However, persistent macroeconomic headwinds, apparent in a deepening manufacturing slump, have led us to revise our 2023 growth estimate lower for the first time this year, by 220,000 bpd," the report read.
While the U.S. economy in particular has shown resilience against lingering inflationary pressures, most of the rest of the world is still feeling the pain. Britain's economy declined by 0.1% in May, after posting a 0.2% increase the prior month, due in part to a decline in overall production.
The Central Bank of Canada added Wednesday that robust demand and a strong labor market were creating "persistent inflationary pressures," prompting an increase to its lending rate of 25 basis points.
"World oil demand is coming under pressure from the challenging economic environment, not least because of the dramatic tightening of monetary policy in many advanced and developing countries over the past 12 months," the IEA stated.
Demand in Europe in particular is sluggish because of a slowdown in industrial activity. Economists at the Organization of the Petroleum Exporting Countries, however, were less pessimistic about the global economic outlook, leaving their global growth forecast of 2.6% for this year unchanged from previous reports.
OPEC sees global oil demand increasing by 2.4 million bpd this year, 200,000 bpd more than the IEA.
"For 2024, world oil demand is forecast to grow by a healthy 2.2 million bpd, reaching about 104.25 million bpd," OPEC's monthly report for July read.
Crude oil prices have been in rally mode for much of July following announcements of production restraint from Russia and Saudi Arabia. The price for Brent crude oil, the global benchmark, was up around 1% in mid-day trading to reach $81 per barrel.
