The Zhitong Finance App learned that the International Energy Agency (IEA) said that due to the energy transition, China's oil demand continues to be sluggish, and the global oil market will face an excess of more than 1 million b/d next year, thereby buffering the impact of turmoil in the Middle East and other regions on oil prices.

The IEA said in a monthly report on Thursday that as of September, China's oil consumption had been shrinking for six consecutive months, and the growth rate this year was only 10% of 2023. China has been the engine of the global oil market for the past 20 years. The agency said that if OPEC+ decides to continue with plans to restore production at next month's meeting, the global oversupply will be even worse.

Toril Bosoni, IEA's head of petroleum industry and marketing, said in an interview on Thursday that China's oil demand may have peaked.

“It is the shift to electric vehicles, high-speed rail and natural gas trucks that is undermining the growth in China's oil demand,” Bosoni said.

The IEA said that in a situation where demand in China continues to weaken, crude oil prices have fallen 11% since the beginning of October, despite ongoing hostilities between Israel and Iran, because traders are concerned about growing production in the Americas. It added that this decline indicates “sufficient market supply in 2025.”

According to the report, global oil consumption will increase by 0.92 million b/d this year — less than half of 2023 — to an average of 0.1028 billion b/d. Next year, oil demand will grow at a rate of 0.99 million barrels per day.

The report said, “The growth rate of less than 1 million b/d in the past two years reflects a below-average global economic situation, where demand suppressed after the pandemic has been completely released. The rapid deployment of clean energy technology is also increasingly replacing oil in transportation and power generation.”

Earlier this year, the IEA predicted that with the shift from fossil fuels to electric vehicles and renewable energy, global oil demand would stop growing this decade.

The agency predicts that despite slowing demand growth, supply from producers such as the US, Brazil, Canada, and Guyana will increase by 1.5 million b/d this year and next. As a result, even if OPEC+ abandons plans to resume production, global supply will still exceed demand by more than 1 million b/d next year.

According to information, OPEC+ has been seeking to restart production capacity that has stopped since 2022, but since the market is still so fragile, the organization has been forced to delay this move twice. Currently, OPEC+ plans to begin a series of moderate monthly production increases in January next year, increasing daily production by 0.18 million barrels, and will hold a meeting on December 1 to review this decision.

The OPEC Secretariat is also aware of the slowdown in demand and has lowered its forecast for this year by 18% in four consecutive months of adjustments. Despite this, its 1.8 million b/d growth forecast is still around double what the IEA expected, and higher than most other market watchers.