The International Energy Agency (IEA) has forecasted that global oil demand will experience its slowest growth since 2009, excluding the sharp downturn caused by the COVID-19 pandemic. The agency attributed this subdued outlook partly to early signs that US tariffs are dampening economic activity.
In its latest monthly oil market report, the IEA projected a rise in oil consumption of just 700,000 barrels per day (b/d) in 2019. This anticipated increase marks the smallest annual growth in demand since the aftermath of the 2008 financial crisis, aside from the dramatic 8.7 million b/d contraction witnessed in 2020 when pandemic-related lockdowns curtailed global economic operations.
The agency also revised down its earlier forecast, which had estimated growth of 720,000 b/d, following weaker-than-expected demand during the second quarter—especially across emerging markets. While weather factors contributed partially to the slowdown, the IEA highlighted the economic uncertainty stemming from US President Donald Trump’s surprise tariffs imposed on several key trading partners.
Although it remains early to conclusively link the slower growth to tariff impacts, the IEA noted that the steepest quarterly declines in oil demand occurred in countries directly affected by the trade tensions. These include China, Japan, South Korea, and Mexico, where demand dropped year-on-year by 160,000 b/d, 80,000 b/d, 70,000 b/d, and 40,000 b/d respectively. Meanwhile, US demand fell by 60,000 b/d. Conversely, oil consumption in Europe and emerging markets outside Asia showed greater resilience.
The IEA’s more cautious outlook contrasts sharply with that of the OPEC+ coalition, which anticipates global oil demand will grow by 1.3 million b/d this year. The two entities have increasingly clashed over their differing demand forecasts, with OPEC leaders at times accusing the IEA of political bias.
Since April, OPEC+ members have been easing production cuts that were initially implemented to support prices, arguing that demand conditions are robust enough to accommodate increased supply.
The IEA reported that global oil production in June was 2.9 million b/d higher than a year earlier, with 1.9 million b/d of the increase coming from OPEC+ countries. As OPEC+ continues to unwind cuts, world oil supply is expected to rise by 2.1 million b/d in 2019, reaching 105.1 million b/d—surpassing the forecast demand of 103.7 million b/d.
This supply surplus is widely expected by market traders to exert downward pressure on prices in the latter half of the year. Some analysts predict Brent crude, the international benchmark, could dip below $60 per barrel in the fourth quarter.
As of Friday morning, Brent crude was trading at $68.80 per barrel, up 0.2%.
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