IEA reveals key key factor underpinning oil demand growth

Oil&Gas Materials 11 March 2019 14:29 (UTC +04:00)

Baku, Azerbaijan, March 11

By Leman Zeynalova – Trend:

Ongoing trade disputes between major powers and a disorderly Brexit could lead to a reduction in the rate of growth of international trade and oil demand, Trend informs with reference to the Oil 2019 report released by the International Energy Agency (IEA).

“But while the economic mood is not encouraging, we expect oil demand to grow in our forecast, although at a more measured pace. A key factor underpinning demand growth is that leading developing economies will continue to expand. China and India will account for 44 percent of the 7.1 mb/d growth in global demand expected to 2024,” said the report.

IEA said that despite its recent slowdown, China’s GDP has more than doubled in real terms in the past decade and is still growing at a healthy clip. “Income levels have grown sharply and the structure of oil demand is moving away from heavy industrial sectors towards consumer needs.”

As for India, while its GDP per capita is still only a fifth of China’s, it is growing more strongly: By 2024, India’s oil demand growth will match China, the organization believes.

“Led by the United States and China, we have identified more than 50 major projects due to come onstream through 2024. These are expected to add 2.2 mb/d in oil consumption over the forecast period, accounting for 30 percent of global growth,” said the report. “ This supports expansions in the early part of our forecast at a rate close to today’s level. While the lack of complete visibility on new projects causes our estimate to fall towards the end of the forecast period, it is highly possible that more projects will be announced and that demand could be higher than currently anticipated.”

The other major growth sector is aviation, according to IEA.

“In recent years, the air travel industry has witnessed a spectacular expansion thanks to rising passenger numbers. Demand will continue to grow strongly, supported by rising incomes in developing countries, more airports being built and growing airline fleets. Asia accounts for 75 perceny of this increase over our forecast period. In absolute terms, while China sees the largest jump in demand, India posts the fastest rate of growth, at an impressive 8.2 percent a year,” reads the report.


Follow the author on Twitter: @Lyaman_Zeyn