The International Energy Agency lowered its forecasts on Thursday, saying global oil demand is continuing to slow and consumption in China is falling.
Oil demand rose by just 710,000 barrels a day in the second quarter, the slowest pace in more than a year, according to the Paris-based body that advises industrialized nations on energy policy.
“Oil consumption in China, long the engine of global oil demand growth, contracted in April and May,” the IEA said in its monthly oil market report.
Chinese demand in the second quarter was also slightly lower than in the same period in 2023.
While demand in that quarter benefited from the reopening of China’s economy after Covid lockdowns, the IEA said the recent decline also “points to an intrinsic slowdown” and that “the downturn in industrial fuels points to broader weakness in manufacturing”.
The world’s second-largest economy is grappling with a property debt crisis, declining consumption, an ageing population and geopolitical tensions abroad.
The IEA has cut its forecast for China’s oil demand this year by 0.2 million barrels per day (mbd) to 17 mbd. While that would be a gain of 0.5 mbd from 2023, it is a far cry from last year’s gain of 1.5 mbd.
The IEA expects Chinese demand growth to slow to 0.3 million barrels per day in 2025, also down 0.2 million barrels per day from its previous forecast.
According to the IEA, the return to pre-Covid normality and weak growth will also cause China’s share of global oil demand growth to decline: from around 70 percent of growth last year to 40 percent this year and next.
Emerging economies such as India and Brazil will account for a larger share of global oil demand growth, while consumption in the OECD advanced economies will decline.
“Global profits are expected to average just below 1 mbd in 2024 and 2025 as sluggish economic growth, greater efficiency and vehicle electrification provide headwinds,” the agency said.
It cut its 2024 global oil demand forecast by 0.1 mbd to 103.1 mbd and its 2025 forecast by 0.2 mbd to 104.0 mbd.
Earlier this month, the IEA said it expected global oil demand to level off at around 106 million barrels per day by the end of the decade as demand in advanced economies fell.
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