The International Energy Agency (IEA) revised its global oil demand forecast upwards, citing a stronger U.S. economy and increased fuel needs arising from the ongoing shipping disruptions in the Red Sea. The agency now predicts a demand growth of 1.3 million barrels per day (bpd) for 2024, an increase of 110,000 bpd compared to their previous estimate.
The Red Sea, a vital artery for global trade, has seen heightened tensions due to attacks by Yemen's Houthi rebels. To avoid these threats, commercial ships are being forced to take longer, more expensive routes around the southern tip of Africa. This detour translates to higher fuel consumption, a factor the IEA considers to be contributing to the rise in oil demand.
However, the U.S. economy also plays a significant role. The IEA describes the American economic outlook as "comparatively buoyant," leading to a rise in oil consumption for petrochemical operations within the country.
This upward revision should be viewed in context. While demand is expected to rise, the growth is significantly lower compared to 2023, which saw a surge of 2.3 million bpd. The IEA attributes this slowdown to ongoing advancements in energy efficiency and the increasing adoption of electric vehicles.
The total global oil demand for 2024 is projected to reach 103.2 million bpd, a modest increase from the 101.8 million bpd recorded in 2023.
The situation in the Red Sea remains a cause for concern. The extended shipping routes not only raise fuel consumption but also add to transportation costs and potentially disrupt global supply chains. While the economic factors specific to the U.S. are expected to contribute to a rise in oil demand, the long-term trend suggests a potential decline due to the increasing focus on alternative energy sources. The IEA's revised forecast highlights the interplay between geopolitical tensions, economic conditions, and the ongoing energy transition.