Global Oil Demand Catapults to Record High
But OPEC+ members continue slashing supply to drive up prices.
A Crude Shock
Get ready for higher pump costs the next time you go to your local gas station. According to the International Energy Agency (IEA) on Friday, oil prices have increased around 20 percent since June. But don’t blame the messenger; blame skyrocketing global demand.
World oil use hit a record high of 103 million barrels a day in June and is likely to grow further in August. In fact, demand is expected to average a record-setting 102.2 million barrels a day this year. The cost of Brent crude, the international benchmark, neared $87 on Friday, up 10 percent from last month. And despite it already being the highest-traded cost for crude since January, the IEA predicted that barrel prices may touch $100 by the end of the year.
A flurry of factors contributed to this immense level of demand. Better-than-expected growth among countries in the Organization for Economic Cooperation and Development pushed consumers to buy more petrol. Summer travel also led to mass oil use, and major economies such as China saw surges in oil consumption. Indeed, 70 percent of all demand came from Beijing, with China once again expected to contribute around 60 percent of all demand next year.
This may come as a surprise to some, especially to those of you who read Wednesday’s report by China’s National Bureau of Statistics, which hinted at signs of worsening deflation driven in part by weak demand for Chinese-made goods both at home and abroad. However, the Chinese government’s stockpiling of crude and continued post-COVID-19 recovery efforts are pushing China to up its oil demand—for now.. .
Get ready for higher pump costs the next time you go to your local gas station. According to the International Energy Agency (IEA) on Friday, oil prices have increased around 20 percent since June. But don’t blame the messenger; blame skyrocketing global demand.
World oil use hit a record high of 103 million barrels a day in June and is likely to grow further in August. In fact, demand is expected to average a record-setting 102.2 million barrels a day this year. The cost of Brent crude, the international benchmark, neared $87 on Friday, up 10 percent from last month. And despite it already being the highest-traded cost for crude since January, the IEA predicted that barrel prices may touch $100 by the end of the year.
A flurry of factors contributed to this immense level of demand. Better-than-expected growth among countries in the Organization for Economic Cooperation and Development pushed consumers to buy more petrol. Summer travel also led to mass oil use, and major economies such as China saw surges in oil consumption. Indeed, 70 percent of all demand came from Beijing, with China once again expected to contribute around 60 percent of all demand next year.
This may come as a surprise to some, especially to those of you who read Wednesday’s report by China’s National Bureau of Statistics, which hinted at signs of worsening deflation driven in part by weak demand for Chinese-made goods both at home and abroad. However, the Chinese government’s stockpiling of crude and continued post-COVID-19 recovery efforts are pushing China to up its oil demand—for now.. .
Despite decreasing oil consumption in the near future, pump prices will remain high. In June, OPEC+ extended its limitation of crude supplies to the end of 2024 to further raise costs, even as production dropped to its lowest level since October 2021. Much of this push has been led by Saudi Arabia, the world’s largest crude oil exporter, which has slashed output by around 500,000 barrels a day in recent months. Russia’s suspension last month of the Black Sea Grain Initiative, which protected shipments out of the region, also hurt output numbers and raised fears of greater instability in the market.
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