By Omono Okonkwo, Head of Operations at The Electricity Hub
On April 11, 2024, the Organisation of Petroleum Exporting Countries (OPEC) released its monthly oil market report (MOMR), shedding light on global oil demand. Their assessment indicates that the forecast for global oil demand growth in 2024 remains stable at 2.2 million barrels per day (mb/d), with slight upward adjustments made to the first quarter of 2024 data.
In contrast, the International Energy Agency (IEA) presents a different perspective. They anticipate a slowdown in global oil demand growth, expecting it to ease to 1.2 million barrels per day (mb/d) in 2024 and further decline to 1.1 mb/d in 2025.
This deceleration is attributed to the normalization of growth post-COVID-19 pandemic and the global energy crisis triggered by Russia’s invasion of Ukraine. The IEA’s analysis shows that global oil demand growth is slowing down.
The first quarter of 2024 witnessed growth of 1.6 million barrels per day (mb/d), 120 thousand barrels per day (kb/d) lower than previously forecasted, mainly due to weaker deliveries in OECD countries.
As the post-COVID-19 rebound fades and factors like vehicle efficiencies and the increasing adoption of electric vehicles (EVs) continue to reduce oil demand, growth is expected to further slow down in 2024 and 2025, reaching 1.2 mb/d and 1.1 mb/d, respectively.
Despite this deceleration, the projected oil demand growth remains aligned with pre-COVID-19 trends. This stability persists despite muted expectations for global economic growth and increased adoption of clean energy technologies.
The IEA highlights regional variations in oil demand. Upward revisions were made for OECD Europe, reflecting better-than-expected performance in the first quarter.
However, downward revisions were noted for the Middle East and Africa, with further downward revisions expected for the Middle East in the second and third quarters of 2024.
Regionally, oil demand in OECD countries is expected to grow by approximately 0.3 mb/d, driven by growth in OECD Americas, Europe, and Asia-Pacific. Non-OECD countries are anticipated to witness robust growth of 2.0 mb/d year-on-year, led by China and supported by Other Asia, the Middle East, India, and Latin America.
Overall, world oil demand is forecasted to reach 104.5 mb/d in 2024, buoyed by strong air travel demand, road mobility, industrial activities, and agricultural activities in non-OECD countries. Capacity expansions and petrochemical margins in non-OECD countries, primarily in China and the Middle East, are expected to contribute to oil demand growth.
However, these projections are subject to various uncertainties, including global economic developments.
In addition, the IEA’s analysis of oil consumption in 2022 and 2023 shows significant increases, driven by economic recoveries from the COVID-19 shock, with China playing a significant role. Nonetheless, the pace of growth is expected to slow in 2024, indicating a broader global deceleration in oil demand growth.
Despite this outlook, the IEA emphasizes the importance of crude oil for the world economy. Finding easy substitutes for its key applications remains challenging. Without more focused energy and climate policies and increased investments in clean energy technologies, oil demand will not decline quickly, keeping it at current levels for some time. However, as China’s demand slows and clean energy technologies advance, the oil market is poised for a significant transformation.
Country sample on oil production decline
Regarding Nigeria’s crude oil production, there was a decline in March 2024 to 1,438,129 barrels per day, compared to 1,539,609 barrels per day in February and 1,643,671 per day in January 2024, as reported by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).
This decline could be attributed to various factors, including crude oil theft, which remains a major challenge. According to data from the Nigerian National Petroleum Company Limited (NNPCL), between March 30 and April 5, the country recorded 155 crude oil theft cases comprising pipeline vandalism acts, illegal refineries, illegal connections, oil spills, and more.