NEW YORK (Oil Price) - Global crude oil demand will rise by 2.1 million bpd this year, the International Energy Agency said in the latest monthly edition of its flagship Oil Market Report, spurred on by the switch from gas to oil for electricity generation.
The new number is a 380,000-bpd upward revision on the IEA’s previous monthly forecast. It also means that the IEA now expects global oil demand this year to average 99.7 million barrels daily.
Supply, according to the IEA, already exceeds demand, as it hit 100.5 million bpd last month, with OPEC+ production adding 530,000 bpd in line with the production increase deal and non-OPEC+ output rising by 870,000 bpd.
Oil prices jumped by over 1 percent after the IEA report was released, with Brent inching closer back to $100 and West Texas Intermediate topping $92 per barrel.
“With several regions experiencing blazing heatwaves, the latest data confirm increased oil burn in power generation, especially in Europe and the Middle East but also across Asia,” the International Energy Agency said in its report. “Fuel switching is also taking place in European industry, including refining.”
The agency also revised upwards its forecast for oil supply for the full year, noting a smaller than expected decline in Russian oil production and exports.
“While Russia’s exports of crude and oil products to Europe, the U.S., Japan and Korea have fallen by nearly 2.2 mb/d since the start of the war, the rerouting of flows to India, China, Turkey and others, along with seasonally higher Russian domestic demand has mitigated upstream losses,” the agency said.
At the same time, the IEA revised down its supply forecast for North America and noted that the global oil supply remains vulnerable to disruptions. It also highlighted OPEC’s reluctance to add too many barrels to current production levels, which adds a downward risk to supply.