As explained by IEA, world oil demand is on track to expand by just shy of 900,000 barrels per day (kb/d) in 2024 and close to 1 million barrels per day (mb/d) in 2025. However, this marks a sharp slowdown compared to the roughly 2 mb/d seen over the 2022-2023 post-pandemic period. Notably, China underpins the deceleration in growth, accounting for around 20% of global gains both this year and next year, compared to almost 70% in 2023.
Moreover, global oil supply plunged by 640 kb/d in September to 102.8 mb/d. This decline was significantly impacted by Libya’s political quagmire, which disrupted the country’s oil production and exports. Additionally, maintenance work in Kazakhstan and Norway lowered output. In contrast, non-OPEC+ supply growth of around 1.5 mb/d this year and next is primarily led by the Americas, accounting for 80% of the overall gains.
Meanwhile, refining margins slumped further in September as gasoline, jet, and diesel cracks deteriorated. Although crude prices improved due to a relatively tighter market, global crude run estimates were subsequently reduced by 180 kb/d to 82.8 mb/d for 2024 and by 210 kb/d to 83.4 mb/d in 2025. Consequently, this represents annual gains of 540 kb/d and 610 kb/d, respectively.
In addition, observed global oil inventories declined by 22.3 mb in August, led by a 16.5 mb draw in crude oil stocks. Notably, OECD industry stocks fell counter-seasonally by 13.4 mb to 2,811 mb, which is 102.7 mb below the five-year average. Preliminary data suggest that oil stocks fell further in September. This decline is underpinned by relatively robust refining activity and OPEC+ supply cuts, resulting in a 135 mb draw in crude stocks since May, while product stocks built by 35 mb over the same period.
Lastly, Brent crude futures rallied by $8/bbl in early October. The market remained on tenterhooks regarding Israel’s response to Iran’s missile attack, while the unwinding of ultra-bearish investor exchange positioning contributed to the price rebound. After slumping to multi-year lows in September due to concerns over an amply supplied market in 2025, Brent was trading at around $78/bbl at the time of writing.
(safety4sea.com, October 17, 2024)