IEA warns: Global oil market will face daily oversupply of over one million barrels next year.

The International Energy Agency (IEA) stated that due to the energy transition leading to sustained low demand for Petrochina, the global oil market will face an excess of over 1 million barrels per day next year, thereby buffering the impact of unrest in the Middle East and other regions on oil prices. In a monthly report released on Thursday, the IEA stated that as of September, China's oil consumption has shrunk for six consecutive months, with growth this year only at 10% of the rate seen in 2023. China has been the engine of the global oil market for the past 20 years. The agency mentioned that if OPEC+ decides to continue with its plan to increase production at the next meeting, global oversupply will worsen. Toril Bosoni, IEA's head of oil industry and markets, said in an interview on Thursday that China's oil demand may have already peaked. "The shift towards electric vehicles, high-speed trains, and natural gas trucks has disrupted the growth of Petrochina's demand," Bosoni said. The IEA stated that despite continued weak demand in China, oil prices have dropped 11% since early October due to increasing production in the Americas despite ongoing tension between Israel and Iran. They added that this decline signals "ample market supplies in 2025". The report mentioned that global oil consumption will increase by 920,000 barrels per day this year, less than half of what was seen in 2023, reaching an average of 102.8 million barrels per day. Next year, oil demand is expected to grow by 990,000 barrels per day. The report stated: "The growth rate of less than 1 million barrels per day for these two years reflects the global economic outlook below the average, with suppressed post-pandemic demand now fully released. The rapid deployment of clean energy technologies is increasingly replacing oil in the transport and power sectors." Earlier this year, the IEA predicted that global oil demand would stop growing this decade as the shift from fossil fuels to electric vehicles and renewable energy takes place. The agency forecasted that although demand growth is slowing down, supply from producing countries such as the United States, Brazil, Canada, and Guyana is expected to increase by 1.5 million barrels per day this year and next year. Therefore, even if OPEC+ abandons its plan to increase production, global supply will still exceed demand by over 1 million barrels per day next year. It is understood that OPEC+ has been seeking to restart production capacity that has been halted since 2022, but due to the fragile market conditions, the organization has had to delay this move twice. Currently, OPEC+ plans to start a series of moderate monthly production increases starting in January next year, raising daily output by 180,000 barrels, and will convene on December 1st to review this decision. The OPEC Secretariat is also aware of the slowdown in demand and has adjusted its forecast for this year by 18% over four consecutive months. Nevertheless, its growth forecast of 1.8 million barrels per day is still about twice that of the IEA's expectations and higher than most other market observers.