World oil demand grows amid Red Sea shipping impasse: IEA
Paris and Frankfurt stock markets hit fresh record highs, oil prices jump
PARIS: Global oil demand is forecast to grow more than expected due to a brighter US economic outlook and rising fuel needs of ships rerouted away from the Red Sea, the International Energy Agency said Thursday.
Commercial ships have been taking longer and costlier journeys around the southern tip of Africa to avoid attacks by Yemen’s Houthi rebels in the Red Sea, a vital international trade route.
The IEA said world oil demand growth is now forecast to increase by 1.3 million barrels per day (bpd) this year, 110,000 bpd higher than in its previous monthly market report. “Disruptions to international trade routes in the wake of turmoil in the Red Sea are lengthening shipping distances and leading to faster vessel speeds, increasing bunker demand,” the IEA said, using a term for the fuel needs of ships.
Global demand is also driven by the “comparatively buoyant economy” of the United States where oil consumption is gaining momentum on rising petrochemical operations, the IEA added. The annual growth in demand, however, remains sharply lower than in 2023, when it reached 2.3 million bpd, on the back of energy efficiency gains and the use of electric vehicles, the Paris-based agency said. Total demand is forecast to reach 103.2 million bpd in 2024 compared to 101.8 million bpd last year.
Meanwhile, the Paris and Frankfurt stock markets hit fresh record highs Thursday as investors eye interest-rate cuts from the Federal Reserve and European Central Bank as inflation cools. Paris struck an all-time peak above 8,200 points and Frankfurt reached a new summit past 18,000. Bitcoin hit a fresh record high at $73,797. “Lower interest rates are conducive to company growth and economic growth helping indices higher,” noted Fiona Cincotta, markets analyst at City Index trading group.
She cautioned, however, that “inflation is sticky, and data later today will shed light on the continued resilience of the jobs market and the consumer” in the United States.
Asian traders also moved cautiously. Hong Kong retreated for a second day after a recent rally, while Shanghai, Sydney, Jakarta and Wellington were also lower.
Tokyo rose on a weaker yen, though traders are awaiting a Bank of Japan meeting next week as speculation swirls that policymakers may begin moving away from an ultra-loose monetary policy— the opposite issue facing most Western economies.
Singapore, Seoul, Taipei, Mumbai, Manila and Bangkok also rose. Investors are keeping tabs on China-US tensions after the House of Representatives overwhelmingly approved a bill that would force
TikTok’s Chinese ByteDance owner to divest from the company or see the platform banned in the United States. China warned the decision will “inevitably come back to bite the United States”.
Tech suffers
On Wall Street, share price pullbacks Wednesday for tech giants including Nvidia, Apple and Tesla weighed on the S&P 500 and Nasdaq, though the Dow ended slightly higher. Italy’s competition authority on Thursday fined TikTok 10 million euros ($11 million), saying the hugely popular video app had failed to sufficiently protect minors. That came as the European Commission sent formal requests for information to TikTok, Facebook, X and other online platforms to examine how they are countering artificial intelligence risks such as deepfakes. The EC on Thursday additionally sent a formal request for information from LinkedIn, Microsoft’s networking platform for professionals, about how users’ personal information is being used for targeting advertising. Oil prices ticked higher, having rallied more than two percent Wednesday in reaction to falling US stockpiles and news that Ukraine had hit Russian refineries.