The slowdown in the Chinese economy is pushing down the price of a barrel. The price of a barrel of Brent crude fell below $70 on Tuesday for the first time since December 2021.
Black gold is increasingly less sold at a high price. The International Energy Agency (IEA) revised downwards its forecast for oil demand growth in 2024 on Thursday, due to the slowdown in the Chinese economy, and pointed to a barrel price at its lowest in almost three years. Global oil demand is expected to grow by 900,000 barrels per day in 2024, or 70,000 barrels per day less than the IEA had forecast in its previous monthly report.
The IEA has been steadily downgrading its forecasts this year: by early 2024, the agency was expecting growth of 1.2 million barrels per day (mb/d), or 300,000 b/d more than today. Total demand this year is unlikely to exceed 103 mb/d, the Paris-based organization estimates, noting that in the first half of the year, oil demand grew by just 800,000 b/d, the same “the weakest since 2020”.
China’s economy slows down
This lack of vigor is mainly explained by the sluggishness of the Chinese economy, whose demand for oil fell in July by 280,000 barrels per day compared to July 2023. But “Outside China, oil demand is tepid at best”explains the IEA, stressing that “Growth has also started to slow in emerging markets”.
The rapid decline in oil demand growth has led to a sharp drop in barrel prices. The price of a barrel of Brent crude fell below $70 on Tuesday for the first time since December 2021, or “$20 less than in April 2024”notes the IEA. Supply, for its part, remains robust, and grew by 80,000 b/d to 103.5 mb/d in August, as political tensions in Libya and maintenances in Norway and Kazakhstan were offset by “greater flows from Guyana and Brazil”the IEA analyses. Over the year, growth is 1.4 mb/d compared to August of the previous year.
For 2025, the International Energy Agency is again counting on growth in global demand for oil “moderate”at 950,000 b/d, and estimates that supply should grow more vigorously, predicting an increase of 2.1 mb/d.
