Oil demand hits record highs in tight market

The International Energy Agency has warned Western nations rampant oil consumption is putting immense pressure on oil supplies, which may increase prices.

Oil demand has reached 103 million barrels a day, boosted by solid summer air travel, increased oil usage in power generation, and surging Chinese petrochemical activity.

Oil hit a six-month high of over $US88 per barrel in London this week. Despite efforts to move away from fossil fuels, oil use remains critical, with China accounting for 70 per cent of the growth in demand.

The supply restrictions put in place by Saudi Arabia and its partners have escalated demand further, and it is anticipated that prices may rise even higher in August. The IEA predicts that oil inventories have decreased, and the situation is set to worsen further into the autumn.

This week, the oil price hit a six-month high above $US88 per barrel in London, as post-pandemic fuel usage surged and the Saudi-led OPEC+ alliance continued to restrict supply. On Friday, Brent futures were trading at $US87.18 in New York midday.

Three years ago, during the COVID-19 crisis, world oil demand plummeted, leading to speculation that consumption may have peaked as governments sought to move away from fossil fuels to prevent catastrophic climate change.

However, the IEA data shows that oil use is more critical than ever, despite the evidence of a warming planet, as demonstrated by the recent heat waves and wildfires in the Northern Hemisphere.

This year, China will account for 70 per cent of the growth in demand, but surprisingly, developed nations have also contributed to the latest surge.