Global oil markets are shifting in surprising ways. From supply concerns to now dwindling demand, the energy sector is facing a new puzzle: where has the demand gone, and how will it reshape the oil market in 2024?

Recently, at the DeliveryONE Expo in Nashville, Mansfield Supply SVP Andy Milton shared key insights on the evolving dynamics of global oil supply and demand. 

In 2022, the world was gripped by concerns over oil shortages, driven by factors like Russia’s invasion of Ukraine and post-pandemic disruptions. Now, just two years later, the conversation has changed. Oil supply has improved, but demand, particularly from critical markets like China, is weakening.

So, why does this matter? For fuel marketers, understanding these shifting patterns is crucial for planning ahead and navigating the volatility of oil markets. Let’s dive into the current landscape and what lies ahead.

Where Has the Demand Gone?

Two years ago, oil markets were scrambling for supply. Prices surged, inventories dwindled, and fuel marketers faced an uphill battle. But in 2024, we find ourselves asking a new question: “Where is the demand?”

Despite rising US oil production, global demand is weakening, particularly due to China's economic slowdown and the rise of electric vehicles. As fuel marketers, the concern now shifts from meeting supply to adjusting for a world where demand may never return to pre-pandemic levels. What are the factors driving this shift, and how should businesses respond?

Understanding the Market Shift

Let's break down what’s happening in 2024:

• Strong Supply: US crude oil production hit 13.40 million barrels per day—a 5.51% increase over 2023. OPEC+, while delaying production boosts in 2023, is slowly increasing output, aiming to balance prices between $70 and $85 per barrel.

• Weak Demand: Global oil consumption growth has slowed, with only a 710,000 barrels per day increase in the second quarter of 2024—the slowest since late 2022. Several factors are at play:

  • China’s slowdown: Once the largest driver of global oil consumption, China’s economy is slowing due to aging demographics and rapid adoption of electric vehicles, reducing its need for gasoline and diesel.

  • Seasonal Reductions: In the US, the end of the summer driving season has led to a natural drop in gasoline demand, with inventories rising by 800,000 barrels, an uncommon occurrence for this time of year.

• The EV Effect: Globally, the rise of electric vehicles is reducing reliance on traditional fuels. The IEA predicts global oil demand will rise by less than 1 million barrels per day between 2024 and 2025, reflecting the ongoing impact of cleaner energy adoption and improved energy efficiencies.

The New Reality for Oil Markets

The oil market of 2024 is vastly different from what we saw in the last few years. The surge in supply and the lag in demand signal a new phase where fuel marketers must adapt to lower, more sporadic demand. The major driver? The global shift toward sustainable energy and the slowing economies of key oil consumers like China.

This shift reveals a counterintuitive truth: despite ample oil supply, the real challenge now lies in understanding and adjusting to weakened demand. For fuel marketers, this means adopting new strategies to remain competitive and meet changing consumption patterns.

How Fuel Marketers Should Respond

The implications of a weaker demand market are profound. Fuel marketers need to rethink their business models, focusing on efficiency, diversification, and sustainability. As electric vehicles continue to grow in popularity and global consumption patterns evolve, traditional fuel demand may not recover to pre-pandemic levels.

The rise of clean energy and sustainable fuel alternatives means the oil industry’s future may be less about supply and more about finding ways to adapt to shrinking demand. For fuel marketers, this could be an opportunity to explore new markets and services that align with the sustainability movement.

The 2024 oil market presents a unique challenge: strong supply, but weakening demand. Are you ready to adapt?