Global Oil Market Trends in 2024: Slowdown in Demand Growth and Falling Prices

In 2024, the oil market is undergoing significant changes. According to the International Energy Agency (IEA), global oil demand growth is slowing. In the first half of 2024, demand increased by only 800,000 barrels per day (kb/d). This marks the smallest growth since 2020. The main reason for this decline is the sharp drop in China’s oil consumption. In July, China’s demand fell for the fourth straight month, down by 280 kb/d. In 2023, demand grew by 2.1 million barrels per day (mb/d). However, in 2024, this figure is expected to reach just 900 kb/d.

Oil Supply and Refining Activity

Oil supply increased by 80 kb/d in August 2024. This happened despite disruptions in Libya, Norway, and Kazakhstan. These were balanced by higher output from countries like Guyana and Brazil. By 2025, global oil production could rise by 2.1 mb/d. While non-OPEC+ countries are boosting supply, OPEC+ may see a reduction of 810 kb/d in 2024. However, if voluntary cuts stay in place, OPEC+ could recover by 540 kb/d in 2025.

Refinery throughput is expected to increase by 440 kb/d in 2024. This would bring global throughput to 83 mb/d. Weaker than expected performance from Chinese refineries and falling margins are dragging forecasts down. Margins even turned negative briefly in Europe and Singapore. In the US Gulf Coast, margins have fallen by two-thirds compared to last year.

Oil Prices Plunge as Demand Drops

Oil prices have dropped sharply. Brent crude oil futures fell by $10 per barrel (bbl) in August and early September 2024. This decline is driven by weaker Chinese demand and global economic issues. By early September, Brent crude was trading at around $70 per barrel. This is the lowest price since late 2021, down by $20 from April 2024. Investors have responded to the lower demand by reducing their holdings.

The price drop reflects the steep fall in Chinese oil demand. In July, China’s oil consumption declined for the fourth month in a row. This contrasts sharply with the average growth of 1 mb/d seen in the previous year. In 2024, China’s oil demand is forecasted to grow by just 180 kb/d. The rise in electric vehicle sales and the expansion of the high-speed rail network are reducing demand for road fuel and air travel.

Oil Demand Outside China

The outlook for oil demand outside China is also weak. In the United States, the world’s largest oil consumer, gasoline demand dropped in June after a brief rise in May. For five out of the first six months of 2024, US gasoline deliveries were lower than in 2023. Slow economic growth and other structural challenges continue to drag down demand in advanced economies. In 2024, oil consumption in these countries will be nearly 2 mb/d below pre-pandemic levels.

As global oil demand slows, the IEA predicts that growth will level off by the end of the decade.

OPEC+ and Supply Forecasts

In September 2024, OPEC+ postponed its planned increase in oil production by two months. This decision was made to assess demand and the effects of the disruption in Libya. However, non-OPEC+ supply is growing faster than demand. This could lead to a surplus even if OPEC+ maintains its production cuts.

Conclusion

The global oil market is facing new challenges. Demand growth is slowing, especially in China, and oil prices are falling. As supply continues to rise and demand remains weak, the market will struggle in the coming years.

At Blue Sky Oilfield Supply & Services (BSO), we stay ahead of these changes, ensuring that our clients are always informed about market trends and equipped with the best tools and solutions for the oil, gas, and petrochemical industries. Our expert team provides the latest equipment and services, keeping you ready for any market conditions.