Present market circumstances counsel world oil demand would common 103.9 million barrels per day (MMbpd) this 12 months, with progress prospects weighed down by United States tariffs, the Worldwide Vitality Company (IEA) mentioned Thursday.
That also represents a rise of simply over 1 MMbpd, in comparison with final 12 months’s progress of 830,000 bpd, with decrease costs anticipated to supply some offset in opposition to a commerce war-induced decline, in keeping with the intergovernmental physique’s month-to-month oil market report.
Alternatively, provide is already rising even earlier than the Group of the Petroleum Exporting International locations and its ally producers unwind manufacturing cuts, resulting in a surplus, the IEA mentioned.
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“The macroeconomic circumstances that underpin our oil demand projections deteriorated over the previous month as commerce tensions escalated between america and several other different nations”, the Paris-based IEA mentioned in a press release. “New US tariffs, mixed with escalating retaliatory measures, tilted macro dangers to the draw back.
“Latest oil demand knowledge have underwhelmed, and progress estimates for 4Q24 [fourth quarter 2024] and 1Q25 have been marginally downgraded to round 1.2 mb/d [million barrels a day], with knowledge for each superior and growing markets coming in under projections”.
“Proposed US tariffs on Canada and Mexico, set to take impact on 1 April, could impression flows and costs from the 2 nations that accounted for roughly 70 % of US crude oil imports final 12 months”, the IEA added.
“In the meantime, the newest spherical of sanctions on Russia and Iran has but to considerably disrupt loadings, whilst some consumers have scaled again purchases”.
Towards the backdrop of escalating commerce tensions and OPEC Plus’ plans to start out restoring manufacturing charges, benchmark crude costs fell by about $7 a barrel in February and early March, the IEA famous. Over the previous eight weeks Brent futures declined by $11 per barrel, it mentioned.
The weakening of costs will help a requirement progress of which Asia would account for almost 60 %, in keeping with the IEA. Asian good points could be led by China, “the place petrochemical feedstocks will present everything of progress as demand for refined fuels reaches a plateau”, it mentioned.
“Dangers to the market outlook stay rife and uncertainties abound”, the IEA mentioned. “Our present balances counsel world oil provide could exceed demand by round 600 kb/d [thousand barrels a day] this 12 months.
“If OPEC+ extends the unwinding of output cuts past April with out reining in provide from members at the moment overproducing versus their targets, one other 400 kb/d might be added to the market.
“Equally, the scope and scale of tariffs stay unclear, and with commerce negotiations persevering with apace, it’s nonetheless too early to evaluate the impression in the marketplace outlook”.
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