The International Energy Agency on Tuesday lowered its forecast for growth in global oil demand this year, citing the weak level of demand in China. It stated that the market will witness a large surplus in 2025 if there is no major disruption to supplies.
The Paris-based agency expected Chinese demand to grow by only about 150,000 barrels per day in 2024, after consumption fell by about 500,000 barrels per day in August compared to the same month last year, which is a decline for the fourth month in a row.
“Chinese oil demand continues to fall below expectations, which is the main factor hindering overall growth,” the International Energy Agency added in its monthly report.
Brent crude futures fell by about 5%, or $3.93, to $73.52 per barrel, while US West Texas Intermediate crude futures fell by about 5.2%, or $3.86, to $70.01 per barrel at the time of writing the report.
Production of Russia
In a related context, another report – published by International Energy today – showed that Russia has facilities that enable it to increase its crude oil production by about 700 thousand barrels per day.
The largest producing countries in the Organization of the Petroleum Exporting Countries (OPEC) and some of its allies have excess production capacity as a result of their decisions to reduce supplies to the global market.
The IEA estimates that Russia has sustainable capacity, or capacity levels that can be reached within 90 days and sustained over a long period, of up to 9.8 million barrels of oil per day, not including gas condensate.
Spare capacity levels, or the market’s assessment of the level of available spare capacity, can affect global oil prices. Some analysts have pointed out that abundant spare capacity acts as a price disincentive.
The agency also said that Russia’s supplies of crude oil amounted to 9.11 million barrels per day in both August and September, compared to its share according to the OPEC Plus production agreements of 8.98 million barrels per day.
OPEC said yesterday that Russia reduced crude oil production in September by 28,000 barrels per day to about 9 million.
