Global Oil, Gas Demand Remains Uncertain, BMI Warns

Global oil and gas demand remains uncertain as trade war impacts and inflation conflict with stable economic growth and rising fuel demand.

That’s what BMI analysts stated in a BMI report sent to Rigzone this week by the Fitch Group, adding that energy consumption remains varied, “with developed markets contracting and emerging market demand growth set to peak in 2025”.

“Our current forecast for global refined fuel demand calls for 1.4 percent annual growth in 2025, a slight improvement on 2024’s estimated growth of 1.3 percent,” the analysts said in the report.

“Global economic growth is expected to be supportive of this forecast, with our Country Risk team forecasting global GDP growth of 2.6 percent for 2025, in line with expected growth seen in 2024,” they added.

The analysts noted in the report, however, that a myriad of potential risks could see economic growth change, “impacting our fuel consumption outlook”.

“A key determinant of 2025’s fuel outlook is the trade policies adopted by the incoming Donald Trump administration, with significant import tariffs expected on major trade partners,” the analysts highlighted in the report.

“These tariffs could see higher costs passed on to consumers, adding to inflation, and raising the risk of tighter financial conditions than currently forecast,” they added.

“In addition, tariffs are likely to impact economic growth across a number of key markets for fuel consumption. Despite the risks, we expect a pragmatic Trump trade policy to foster stable growth rather than declines, which supports our forecast for steady fuel demand growth in 2025,” the analysts continued.

The BMI analysts warned in the report that markets remain highly sensitive to mainland China’s economic outlook and said that should provide guidance for the country’s energy consumption.

“China’s total refined fuel consumption growth is projected to slow down to 2.0 percent in 2025, attributing to sustained weakness in diesel consumption,” they noted.

“Petrochemical feedstocks LPG and naphtha will remain key drivers behind overall fuel demand growth as China’s focus on the domestic growth fuels greater demand from consumers,” they added.

The analysts also warned that U.S. fuel consumption remains a downside risk in 2025, “with our forecast calling for minimal growth of 0.4 percent after declines in both 2023 and 2024”.

“Uncertainty stems from the notion that the U.S. is now in a structural decline, but the slowing growth in EV adoption and new Trump administration policies add to the risk that peak refined fuel consumption in the U.S. has passed,” the analysts said in the report.

The BMI analysts stated that global natural gas demand looks to remain resilient and forecast in the report that this demand will register 2.6 percent growth in 2025 after 2.3 percent growth this year.

“Liquefied natural gas (LNG) continues to drive new consumption, with global export capacity set to rise as demand in Europe and Asia remains strong,” the analysts highlighted in the report.

“We project China’s LNG imports to grow to 76mtpa in 2024 and rise marginally to 76.2mtpa in 2025,” they added.

The analysts warned in the report that LNG trade between the U.S. and China could face challenges if the Trump administration adopts a more aggressive stance on trade with China.

They also noted that the “rapid growth seen in European LNG imports since the war in Ukraine began has largely stalled, with new regasification capacity exceeding demand”.

“We expect a minor increase in LNG imports year on year of 2.4 percent within the EU, from 127.1bn cubic meters (bcm) to 130.1bcm, owing to a reduction in production (2.8 percent) rather than an increase in consumption,” they added.

Rigzone has contacted the Trump transition team and the Chinese government for comment on the BMI’s report. At the time of writing, neither have responded to Rigzone’s request yet.

In a research note sent to Rigzone by the JPM Commodities Research team late Wednesday, analysts at J.P. Morgan said global oil demand averaged 103.4 million barrels per day during November.

“Year to date, demand has risen by 1.3 million barrels per day compared with our November 2023 forecast of a 1.5 million barrel per day increase,” the analysts highlighted in the research note.

The J.P. Morgan analysts stated that global oil demand demonstrated resilience in the final week of November, “buoyed by increased travel activity during the U.S. Thanksgiving holiday”.

“Our analysis indicates that global demand in November rose by 350,000 barrels per day compared to the previous month, surpassing our initial forecast by nearly 150,000 barrels per day,” they added.

“As we transition into December, we anticipate a further increase in global oil consumption, with an expected rise of 400,000 barrels per day month on month, or 2.5 million barrels per day year over year,” they continued.

“This growth is primarily driven by heightened heating demand due to colder weather forecasts across the U.S. and Europe, which are projected to be below and at the 10-year averages, respectively,” they went on to state in the note.

To contact the author, email andreas.exarheas@rigzone.com