Blow for Putin and MBS as oil demand slows

Falling demand will hit Saudi Arabia's Crown Prince Mohammed bin Salman, whose oil revenue is spurring the country's economic diversification. : Jacquelyn Martin/AP POOL

Forecasts for growth in global oil demand next year have been lowered as recovery from the pandemic slows and electric vehicle (EV) use soars.

The International Energy Agency (IEA) said on Friday that demand will rise by just one million barrels per day (bpd) in 2024, 150,000 bpd less than previously forecast.

It will come as a blow to both Russian President Vladimir Putin, who uses oil and gas revenues to finance his war in Ukraine, and Saudi Crown Prince Mohammed bin Salman, whose oil revenues help diversify the country's economy.

IEA said: «With the recovery from the pandemic fizzling out and economic conditions sluggish, tighter efficiency standards and new EVs taking a toll on usage, growth is forecast to slow to 1 million bpd in 2024.»

The Paris energy watchdog predicts that 14 million electric vehicles will be sold by the end of 2023, up 35% from 2022.

By 2030, electric vehicles will replace five million barrels of oil a day.

But for now, global oil demand is still breaking records after the reopening of China after the pandemic and the restoration of air travel around the world.

In June, demand reached a record high of 103 million barrels per day. The IEA said August demand could exceed this level.

The IEA said that global oil demand will grow by 2.2 million barrels per day to reach 102.2 million barrels per day in 2022, with China providing more than 70% of this growth.

At the same time A string of production cuts led by Saudi Arabia fueled a price rally as Brent topped $88 a barrel on Thursday, the highest level since January.

Global oil supplies fell nearly a million bpd to 100.9 million barrels per day in July after a sharp cut in production in Saudi Arabia and its allies.

However, the IEA analysis showed that Putin and the Saudi crown prince may not be able to rely on this boom in the long term perspective.

It says demand growth will more than halve next year as high interest rates hinder economic growth in the West and clean energy policies curtail demand.

< p>IEA added: «The outlook for the global economy remains challenging with soaring interest rates and tightening bank credit squeezing businesses that already have to cope with sluggish manufacturing and trade.»