IEA Foresees Oil Demand Growth for 2024

The International Energy Agency (IEA)  adjusted its growth projections for oil demand for the next year. Global demand will exceed previous projections in 2024, despite the economic slowdown in most major economies, although the increase will be more moderate than in 2023, according to the agency. 

The report highlights a "vulnerable" balance in oil markets expected to be "more volatile in the future" due to demand continuing to outpace supply, especially as winter approaches in the northern hemisphere, with persistent "growing economic and geopolitical risks." Nevertheless, it is indicated that, so far, the reactivation of the conflict in the Middle East has not impacted supply.

In its November monthly report, the organization estimated that oil demand in 2023 will reach 102MMb/d by the end of the year, 2.4 million more than what was previously predicted. The increase is attributed to the resilience of production in the United States and record demand from China in September, reaching 17.1MMb/d. Likewise, it is expected that the increase in demand will slow down in 2024, although it will still be higher than previous estimates.

According to the IEA, an increase of 930Mb/d is forecast for next year, compared to the initially calculated 880Mb/d. This deceleration is attributed to improvements in energy efficiency, growth in the adoption of electric vehicles, and the economic slowdown.

In September, IEA reported a significant decline in Mexican oil production over the next five years, attributing it to reduced state investment and limited participation from private companies. These companies heavily depend on the development of fields they have secured in the country. The anticipated drop, amounting to 500Mb/d or 33% in the extraction of all hydrocarbon liquids, including crude oil, condensates, and gas liquids, positions Mexico as the country with the highest production percentage reduction outside of OPEC nations.

Comparatively, Russia's production within OPEC is projected to decrease from the current 9.6MMb/d to 9MMb/d over the same period, marking a 5.5% reduction. According to data from January to July, national crude oil production, including condensates, averaged 1.944MMb/d, underscoring the challenges faced by Mexico's oil sector.

The international organization stated in its document, Oil 2023, Analysis and Forecast to 2028, that the long-term decline in Mexico's oil production shows a brief respite in 2022-23 as the Quesqui field ramps up.