PARIS: Global oil demand growth slowed in the second quarter of the year, primarily due to softer construction and industrial activity in China, the International Energy Agency said Tuesday. “Demand is set to rise by less than 1 mbd (million barrels per day) in both 2024 and 2025,” said the IEA in its monthly oil report.

That growth rate is far slower than last year’s 2.1 mbd increase and slower than pre-pandemic expansion.The IEA expects global consumption to come in at 103.06 mbd in 2024, up from 102.09 mbd last year and 100.6 mbd in 2019.

Europe will be the only continent to see a drop in overall demand, with the Americas rising only marginally.Demand will continue to expand apace in the Asia-Pacific region, including in China, according to the IEA.

Yet the IEA noted Chinese oil demand fell in June for the third consecutive month, primarily due to weaker demand for gasoil (diesel) and naphtha, products used by the construction and manufacturing industries. The IEA noted that the rising number of trucks running on natural gas or batteries was also eroding demand for diesel. “Chinese oil demand growth has gone into reverse due to a slowdown in construction and manufacturing, rapidly accelerating deployment of vehicles powered by alternative fuels and comparison to a stronger post-reopening baseline,” said the Paris-based IEA, which advises oil-consuming nations on energy policy.

It noted that sales of electric cars have also been strong, citing data from the China Passenger Car Association showing that they accounted for more than 50 percent of sales in July, and are up by third for the first half of the year.

The report from the IEA, which advises industrialized countries, is the second this week to flag that a sluggish economy is likely to curb demand in China, the world’s biggest oil importer and second biggest oil consumer. “Weak growth in China, following the post-COVID surge of 2023, now significantly drags on global gains,” the Paris-based energy watchdog said in its report.

While the impact of China’s post-pandemic economic bounce has faded, the IEA expects strong demand in Western economies, notably the United States, where one third of global gasoline is consumed.The US summer driving season is expected to be the strongest since the pandemic, the IEA said, adding supply cuts by the Organization of the Petroleum Exporting Countries and allies (OPEC+) had tightened the physical market. “For now, supply is struggling to keep pace with peak summer demand, tipping the market into a deficit,” the IEA said.

World oil demand will rise by 950,000 barrels per day (bpd) in 2025, the IEA said, down 30,000 bpd from the previous forecast.

It left this year’s growth forecast unchanged at 970,000 bpd. Outside the developed countries of the OECD, demand in the second quarter of this year was the slowest since the pandemic year of 2020, the IEA said.

China’s share of this demand growth is expected to fall to about a third in 2024, compared to just over two thirds in 2023.The IEA said the fall in China was most marked in gasoil and naphtha, reflecting less construction and manufacturing, and implying “a pause in the relentless expansion of the country’s petrochemical sector”.

OPEC on Monday cut its 2024 demand forecast for the first time since July 2023, also citing China. Even after its downward revision, the group of oil producing nations said world oil demand would rise by 2.11 million bpd this year, compared with the IEA’s 970,000 bpd. — Agencies