IEA downgrades oil demand growth forecast as prices heat up on elevated Middle East tensions

The
International
Energy
Agency
on
Friday
downgraded
its
forecast
for
2024
oil
demand
growth,
citing “exceptionally
weak”
OECD
deliveries,
a
largely
complete
post-Covid-19
rebound
and
an
expanding
electric
vehicle
fleet.

In
its
latest
monthly
oil
market
report,
the
IEA
said
it
had
revised
down
its
2024
oil
demand
growth
forecast
by
around
100,000
barrels
per
day
(bpd)
to
1.2
million
bpd.

The
global
energy
watchdog
said
that
it
expected
the
pace
of
expansion
to
decelerate
even
further
to
1.1
million
bpd
next
year “as
the
post-Covid
19
rebound
has
run
its
course.”

The
IEA’s
report
comes
amid
a
rebound
in
oil
prices
on
elevated
Middle
East
tensions,
with
energy
market
participants
closely
monitoring
the
prospect
of
supply
disruptions
from
the
oil-producing
region.

Iran,
which
is
a
member
of
the
Organization
of
the
Petroleum
Exporting
Countries,
has
vowed
to
retaliate
after

it
accused
Israel
of
bombing
its
embassy
in
the
Syrian
capital
of
Damascus
earlier
this
month.

The
attack
has
ratcheted
up
tensions
in
a
region
already
grappling
with
the
ongoing

Israel-Hamas
war.
Israel
has
not
claimed
responsibility
for
the
attack.

International
benchmark


Brent
crude
futures
with
June
delivery
traded
1%
higher
at
$90.62
per
barrel
on
Friday
at
10:00
a.m.
in
London,
while
U.S.

West
Texas
Intermediate
futures
with
May
delivery
rose
1.2%
to
trade
at
$86.07
per
barrel.

“We’re
seeing
the
surge
in
[electric
vehicle]
sales,
especially
in
China
and
also
in
Europe,
really
taking
into
gasoline
demand,
but
also
in
the
United
States,”
Toril
Bosoni,
head
of
oil
industry
and
markets
division
at
the
IEA,
told
CNBC’s “Street
Signs
Europe”
on
Friday.

“There
has
been
a
lot
of
talk
about
sales
not
increasing
as
much
as
maybe
was
expected,
but
EV
sales
and
increased
fuel
efficiencies
in
the
car
fleet
is
lowering
gasoline
demand,
at
least
in
advanced
economies
and
particularly
in
China.”

Asked
about
some
of
the
main
concerns
relating
to
oil
supply
security,
Bosoni
replied, “We
are
watching,
obviously,
the
Middle
East
very
closely.
The
continued
tanker
attacks
in
the
Red
Sea
is
of
key
concern,
but
also
escalating
tensions
between
Iran
and
Israel,
and
then
we’re
seeing
tensions
between
Russia
and
Ukraine
continue,
with
attacks
on
Russian
refineries.”

“So,
there
are
several
tension
points
in
the
oil
market
today
that
we’re
watching
very
closely
that
could
have
major
impacts
…
if
there
would
be
any
significant
outages,”
she
added.