World oil demand stronger than expected on resilient US, record-high China petchem demand

LONDON (ICIS)–World oil demand is stronger than expected with deliveries from the US more resilient than initially forecast, and record-high demand from China fuelled by a booming petrochemical sector.

The International Energy Agency (IEA) on Tuesday revised its 2023 growth forecast up to 2.4m bbl/day and predicted that global demand will rise to a record annual high in 2024.

“This year’s surge will take world oil demand to 102m bbl/day before growth eases to 930,000 bbl/day in 2024 as the last phase of the pandemic economic rebound dissipates and as advancing energy efficiency gains, expanding electric vehicle fleets and structural factors reassert themselves,” the IEA said in its monthly oil report.

“Despite growth that is almost two-thirds lower than this year’s increase, global oil demand is set to rise to a record annual high of 102.9m bbl/day in 2024.”

China’s buoyant petrochemical sector drove September oil demand in the country to another all-time high of 17.1m bbl/day. “China is set to account for 1.8m bbl/day of the total 2.4m bbl/day increase that lifts demand to 102m bbl/day in 2023,” the agency said.

China’s strong demand was detrimental to petrochemical producers elsewhere, most notably in Europe and advanced economies in Asia and Oceania, with those regions seeing an oil demand slump in Q3.

On the supply side, the IEA said growth in the US and Brazil is outperforming forecasts, helping to propel global supply to a record 101.8m bbl/day in 2023.

There has been no material impact on oil supply flows following the war between Israel and Hamas that began in early October.

“World oil supply growth is also exceeding expectations. Fears that the war between Israel and Hamas would escalate into a wider regional conflict, disrupting oil supply flows, have yet to materialise. Barring large unforeseen outages, world oil supply is firmly on an upward trajectory,” the IEA said.

On Monday this week, OPEC also revised up its global oil demand forecast on growing demand from China.