IEA: Global oil demand sharply increased in fourth-quarter 2024

Global oil demand rose seasonally in fourth-quarter 2024, posting a robust annual growth of 1.5 million b/d, according to the International Energy Agency (IEA)’s January 2024 issue Oil Market Monthly Report.

This marks the strongest level since fourth-quarter 2023, exceeding IEA’s previous forecast by 260,000 b/d. 

The rise in consumption was driven by lower fuel prices, colder weather in the Northern Hemisphere, and abundant petrochemical feedstocks, the IEA said. Annual growth is now estimated at 940,000 b/d for 2024, with an acceleration to 1.05 million b/d in 2025 as the economic outlook improves marginally. World oil demand will reach 104 million b/d in 2025.

“Following a relatively mild start to the winter heating season, the weather turned decidedly colder in December in Canada, the northern and central regions of the US, much of Europe, Russia, China and Japan. Average heating degree days were significantly higher than a year ago and slightly above the 5-year average, boosting oil demand,” said IEA. In particular, OECD oil demand for fourth-quarter 2024 has been raised by 250,000 b/d, underpinning a 90,000 b/d upward adjustment to IEA’s global growth estimate for 2024.

World oil supply inched higher by 20,000 b/d m-o-m to 103.5 million b/d in December 2024, up 390,000 b/d y-o-y, as increased output from OPEC+ African producers more than offset seasonal declines in non-OPEC+ supply.

Global oil supply is projected to rise by 1.8 million b/d in 2025 to 104.7 million b/d, compared with an increase of 660,000 b/d in 2024. Non-OPEC+ production is set to rise by 1.5 million b/d in both 2024 and 2025, to 53.1 million b/d and 54.6 million b/d, respectively.

Oil prices surged past $80/bbl in early January 2025, propelled by tighter sanctions on Russian and Iranian oil and the North American cold snap.

Russian, Iranian oil 

Russian oil exports eased by 40,000 b/d to 7.33 million b/d in December as a 250,000 b/d drop in crude oil shipments was mostly offset by higher product loadings. Export revenues rose by $0.41 billion to $15.1 billion as product prices improved. 

On Jan. 10, the US government issued new sanctions intended to reduce revenues from the Russian oil sector (OGJ Online, Jan. 10, 2025). 

“Washington targeted two major oil producers (Gazprom Neft and Surgutneftegaz), over 160 tankers carrying oil for Russia, Iran and Venezuela and ship insurance providers, further complicating oil trade logistics for those countries. But exports on non-shadow tankers remain viable for Russian oil purchased below price caps,” said IEA.

At the same time, there is heightened speculation that the incoming US administration will take a tougher stance on Iran's oil exports, compounding the impact of US Treasury sanctions on Tehran, said IEA. On Dec. 19, the US expanded sanctions on vessels transporting Iranian crude. The new sanctions on Iran’s shadow fleet now cover vessels that transported an average of over 500,000 b/d of Iranian crude in 2024, nearly one-third of the country’s crude exports. While it is too early to fully quantify the potential impact from these new measures, some operators have reportedly already started to pull back from Iranian and Russian oil.

Oil inventories

Global observed oil inventories increased by 12.2 million bbl to 7,655 million bbl in November, as higher crude oil stocks on land and on water more than offset draws in oil products. OECD industry stocks drew 20.1 million bbl to 2,749.2 million bbl, 118.3 million bbl below their 5-year average and the lowest level since August 2022. According to preliminary data, global inventories extended the gains in December, led mainly by a surge in oil products on water.

“If decreases in supply from weather impacts, sanctions or other developments become substantial, oil stocks can quickly be drawn to meet operational requirements in the near term. Moreover, non-OPEC+ producers are expected to add another 1.5 million b/d of supply in 2025, the same as in 2024, led by the US, Brazil, Guyana, Canada, and Argentina. OPEC+ members have also been looking to unwind extra voluntary production cuts and could ramp up if needed. Those additions should cover both potential supply disruptions and expected demand growth,” said IEA.

Refining

Refinery crude runs jumped 1.2 million b/d m-o-m to a 5-year high of 84.3 million b/d in December, as scheduled autumn maintenance was completed and margins improved. 

Refinery runs were up by 930,000 b/d y-o-y, led by the US, the Middle East, and Africa. Runs are forecast to rise by 660,000 b/d in 2025, following growth of 510,000 b/d in 2024, led by stronger non-OECD throughputs, while closures in the Americas and Europe weigh on OECD rates.