Energy transition to curb oil demand growth

According to International Energy Agency (IEA), the boost to oil demand growth from the post-pandemic recovery is set to end this year with economic challenges and the transition to cleaner fuels sapping growth from 2024.

Global oil demand will grow by 2.4 million barrels per day (bpd) in 2023 to a record 102.3 million bpd, the IEA said in its monthly report.

However, the agency expects economic headwinds to reduce growth to 860,000 bpd next year and increasing use of electric vehicles to help to reduce that to 400,000 bpd in 2028.

Global oil markets are still slowly recalibrating after three turbulent years in which they were upended first by the Covid-19 pandemic and then by Russia’s invasion of Ukraine. The global energy crisis triggered by the war in Ukraine has resulted in an unprecedented reshuffling of global trade flows. Global oil markets could tighten significantly in the coming months, as production cuts by the OPEC+ alliance temper an upswing in global oil supplies. However, the multifaceted strains on markets look set to ease in the following years, according to the new report.