The July Oil Market Report by the International Energy Agency (IEA) says demand is at its lowest level since 2009 as production continues to expand.
Stockpiling by the Chinese and Americans is masking any changes in demand in the rest of the world.
Demand slowing
Global refinery runs are set to rise over July and August, reaching seasonal peaks in both 2025 and 2026. Refining margins eased in June, as crude prices rallied but subsequently recovered to former highs in early July, led by stronger diesel performance.
Israel’s air strikes on Iranian military and nuclear targets sent prices soaring in mid-June with North Sea oil briefly surpassing $80 a barrel before returning to pre-conflict levels after the ceasefire.
Trading just prices are down $15 a barrel compared to a year ago. Escalating geopolitical tensions are balanced by an apparently oversupplied market.
While production increases
Large supply increases led by OPEC compare with modest expected growth in global oil demand.
Price indicators also point to a tighter physical oil market than suggested by the hefty surplus in oil reserves, with most of the surplus stocks being held in Chinese crude oil and US gas liquids stocks.
These inventories mask any changes in demand elsewhere. China’s new policies aimed at improving its energy security are positioning oil companies as long-term strategic storage partners for the government, effectively removing these volumes from the global market.
Chinese companies are expected to continue driving the expansion of inventories, with the pace of stock building over the coming months key to the market balance.
The IEA is one of the world’s most authoritative and timely sources of data, forecasts and analysis on the global oil market.
