The International Energy Agency (IEA) has reported that disruptions to shipping routes due to attacks by Yemen’s Houthi rebels have led to a short-term boost in the oil market. Global oil demand has been revised upwards by 110,000 barrels per day, with forecasts now predicting a growth of 1.3 million barrels per day in 2024. The disruptions have caused an increase in shipping distances and faster vessel speeds, resulting in higher demand for bunker fuel.
However, the IEA warns that the post-pandemic economic outlook could hamper long-term demand growth, despite the short-term benefits of shipping disruptions. The agency expects oil demand growth to be higher in non-OECD countries compared to OECD regions, with China’s dominance in oil demand gradually diminishing. The report also highlights that total oil demand is expected to reach 103.2 million barrels per day in 2024.
If OPEC+ continues with voluntary cuts through 2024, the IEA anticipates a slight deficit in the oil market rather than a surplus. Oil prices have seen an increase following the report, with Brent crude futures rising to $84.75 a barrel and US West Texas Intermediate crude reaching $80.55.
Analysts remain optimistic about the oil market, despite differences in forecasts between the IEA and OPEC. Tamas Varga at PVM Oil Associates stated that the report does not deter the positive sentiment in the market. Overall, the IEA report highlights the short-term impact of shipping disruptions on the oil market, while also pointing towards potential challenges in the long run due to economic factors and evolving energy trends.
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