International Energy Agency: Global oil demand to fall by 1 million barrels per day

Afghan Voice Agency (AVA) - International Service: According to CNBC, the International Energy Agency report states that this decline in global oil demand will be the first annual decline since the peak of the Covid-19 pandemic in 2020. This decline in demand is highly uneven both in terms of product and region.

 

Oversupply forecast, tanker flow recovery

The IEA report adds: While the global oil market balance looks set to return to surplus by the end of the year, the forecast assumes that tanker flow through the Strait of Hormuz will gradually recover, allowing producers to resume using fields and refineries in the Middle East and elsewhere to resume product shipments.

The renewed escalation of fighting in the Persian Gulf this week highlights the risks of failing to reach a lasting peace deal that is essential to normalizing oil markets, according to the report.

 

IEA Head of Oil and Markets Statement

“We will not see a rapid recovery in oil production and supply,” said Toril Bossoni, head of the IEA’s Oil and Markets Division, noting that the situation in the Persian Gulf region is highly uncertain and volatile.

 

“But with significant growth in production from other producers and a more than expected decline in demand, we could return to a surplus in the oil sector by the end of the year and next year,” he added.

“If stability is established in the region, this will provide a good deal of peace for the market and allow countries to rebuild their reserves,” Busoni concluded.

 

The IEA report comes as global oil markets have been hit by geopolitical tensions in the Persian Gulf and uncertainty over a peace deal in the region in recent weeks. The projected decline in demand could signal structural changes in energy consumption and increased efficiency and the use of renewable energy sources.

 

Economists believe that a return to a surplus could lead to lower oil prices and relative calm in energy markets, but this will depend heavily on political and security developments in the Gulf region.