IEA increases 2023 global oil demand projection, approaching all-time high

The International Energy Agency has said it had revised upwards its forecast for global oil demand growth in 2023 as demand is "scaling record highs".

World oil demand already hit a record 103 million barrels per day in June and August and "could see yet another peak", the Paris-based IEA said on Friday in its monthly report.

"For 2023 as a whole, global oil demand is set to expand by 2.2 million barrels per day to 102.2 million barrels per day," it said.

China accounted for 70 percent of growth, the IEA said, adding that demand in the Asian giant was "also stronger than expected, reaching fresh highs despite persistent concerns over the health of the economy".

"World oil demand is scaling record highs, boosted by strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity," the IEA said.

'Highest ever annual level'

The forecasted expansion in global demand in 2023 would mark its "highest ever annual level", according to the agency, which in February had already forecast an annual record for the year, of 101.9 million barrels per day.

The increasing demand for oil comes amid tensions in world markets as global oil supply plunged in July.

A sharp reduction in production by Saudi Arabia last month to help prop up prices saw output from the 23-nation OPEC+ alliance fall 1.2 million barrels per day, to 50.7 mb/d.

Volumes by non-OPEC+ members rose to 50.2 mb/d, the report said.

Looking ahead to 2024 as the world races to combat climate change and reduce the use of fossil fuels, the IEA said it anticipated demand growth slowing down.

"With the post-pandemic rebound running out of steam, and as lacklustre economic conditions, tighter efficiency standards and new electric vehicles weigh on use , growth is forecast to slow to 1 mb/d in 2024," it said.