Global oil demand growth is losing steam while supplies outside OPEC+ continue to swell, potentially leaving markets in surplus all year, the International Energy Agency said. 

Growth in world consumption slowed by about 35% in the fourth quarter of last year compared with the preceding three months amid a deceleration in China, the IEA said in its monthly report. In 2024 as a whole, the agency continues to see global demand increasing by 1.2 million barrels a day — just half the rate of last year. 

At the same time, supplies outside the OPEC+ alliance are on track to increase by 1.6 million barrels a day, led by the US, Brazil, Canada and Guyana. World inventories are set for a small build this quarter instead of the decline forecast previously. 

Oil prices are holding near $81 a barrel in London, after posting only modest gains this year as the sense of plentiful supplies allays fears over conflict in the Middle East and attacks on shipping in the Red Sea. 

Last month, global oil balances tightened as winter storms shuttered output in North America and OPEC+ began new production cuts, resulting in a “massive” supply drop of 1.4 million barrels a day, the IEA said. However, the supply contraction may prove short-lived, as “the rising wave of non-OPEC+ oil growth resumes” in the second quarter. 

Furthermore, the curbs by the Organization of Petroleum Exporting Countries and its partners have been much smaller than announced. The group, led by Saudi Arabia, pledged cutbacks amounting to roughly 900,000 barrels a day this quarter, but last month its output fell by just 330,000 a day, according to the IEA’s estimates.