Since the beginning of this year, the economic difficulties and real estate crisis in Asia have been suppressing global oil demand, consumption, and growth expectations, limiting the increase in crude oil prices.

Boosted by a 50 basis point interest rate cut by the Federal Reserve, geopolitical tensions, and sluggish inventory at Cushing, the physical delivery location of WTI futures contracts on the New York Mercantile Exchange, oil prices recorded a one week increase last week. Nevertheless, the economic slowdown in major Asian countries continues to suppress market sentiment.

Ole Hansen, the head of commodity strategy at Shengbao Bank, wrote in a report last Friday that the recent drop in Brent crude oil below $70 was relatively short-lived.

He said, "The conclusion drawn by the market is that levels below 70, coupled with hedge funds' historic low confidence in rising crude and finished oil prices, need to prove that an economic recession is reasonable, and this week's significant interest rate cuts in the United States have helped reduce this risk

Although there has been some renewed optimism in the market after the Federal Reserve's significant interest rate cuts, concerns about Asian powers have not disappeared and may continue in the medium to long term.

Due to weaker than expected economic growth and the continued weakening of diesel demand caused by the real estate crisis, the fuel consumption of major Asian countries so far this year has been disappointing.

But the economic slowdown of major Asian countries may exceed the short-term. Analysts believe that due to the increasing use of electric vehicles and the growing share of liquefied natural gas as a fuel in truck transportation, road fuel demand will peak within a year, even if it has not yet peaked.

OPEC has lowered its forecast for oil demand growth in 2024, citing concerns over major Asian countries. OPEC predicts in its monthly oil market report for September that global demand will increase by 2.03 million barrels per day in 2024, lower than its previous estimate of 2.11 million barrels per day.

The demand growth of major Asian countries in 2024 has decreased from 700000 barrels per day to 653000 barrels per day. OPEC pointed out that "headwinds in the real estate industry and the increasing popularity of liquefied natural gas trucks and electric vehicles may drag down future diesel and gasoline demand

The International Energy Agency (IEA) also stated in its monthly report this month that due to the rapid slowdown in consumption in major Asian countries, global oil demand growth has significantly slowed down, and will only reach 900000 barrels per day in 2024. The institution has lowered its growth forecast by 70000 barrels per day from last month's assessment.

In its highly anticipated Oil Market Report, the IEA stated that global oil demand in the first half of 2024 grew by only 800000 barrels per day year-on-year, the lowest growth rate since 2020.

The IEA stated that the main reason for the slow growth is the "rapid slowdown in the economies of major Asian countries", with oil consumption in these countries shrinking by 280000 barrels per day year-on-year for the fourth consecutive month in July.

The agency predicts that the oil demand of major Asian countries will only increase by 180000 barrels per day this year, "due to the widespread economic slowdown and the acceleration of alternative fuels replacing oil, putting pressure on consumption

The oil demand of major Asian countries is currently steadily shrinking, with a year-on-year decrease of 1.7% in July, or 280000 barrels per day. This is in sharp contrast to the average growth rate of 9.6% in 2023. Therefore, we expect the annual growth rate in 2024 to be only 1.1%, or 180000 barrels per day

The IEA points out that looking ahead, other emerging economies in Asia, especially India, will become the main driving force for global oil demand.

The organization not only advocates for a rapid shift towards renewable energy and electric vehicles, but also predicts a structural shift in oil demand in major Asian countries due to the popularity of alternative road fuels.

Oil industry executives stated at the APPEC conference held in Singapore earlier this month that oil demand growth in major Asian countries has been slowing down due to weak economic performance and a shift towards electric vehicles and liquefied natural gas fuel trucks.

Russell Hardy, CEO of Vitol Group, the world's largest independent oil trader, said in early September, "Gasoline prices in major Asian countries may peak this year or next year, not because no one is moving, but because they are slowly shifting towards electric vehicles