April 14 (UPI) — Global oil demand is expected to set a record this year, led largely by China, and supply-side pressures could be long term, the International Energy Agency said Friday.
IEA was the last of the big three energy reports out this week, following monthly forecasts from the U.S. Energy Information Administration and the Organization of the Petroleum Exporting Countries.
Based in Paris, the IEA said global oil demand is on pace to increase by 2 million barrels per day this year to reach a record at 101.9 million bpd.
“Reflecting the widening disparity between regions, non-OECD countries, buoyed by a resurgent China, will account for 90% of growth,” the IEA’s report read.
OECD is the Organization for Economic Cooperation and Development, made up of 38 economies in the West and Latin America. China alone accounts for half of the increase in global demand.
China’s growth trajectory follows years of tight social restrictions imposed during the COVID-19 pandemic. OPEC economists in their monthly market report for April said they expected China’s economy to expand from 3% in 2022 to 5.2% this year, outpacing the 1.2% forecast for the U.S. economy, the world’s largest.
IEA, meanwhile, is anticipating a mismatch between supply and demand. OPEC opted to cut 1.6 million bpd in May, which the Paris-based agency said would not be met by production gains elsewhere. Year-on-year global production is on pace to increase by 1.2 million bpd this year, compared to 4.6 million bpd last year.
“Growth from the U.S. shale patch, traditionally the most price-responsive source of more output, is currently limited by supply-chain bottlenecks and higher costs,” the IEA added.
The EIA, the statistical arm of the Energy Department raised its forecast for domestic crude oil production to around 12.5 million bpd, making it the world’s leading producer.
IEA is nevertheless expecting a supply-side deficit this year, which should push both the price of crude oil and refined petroleum products such as gasoline and diesel higher.
“Consumers currently under siege from inflation will suffer even more from higher prices, especially in emerging and developing economies,” the IEA warned.