World Oil Demand to Keep Growing This Decade Despite 2027 China Peak, IEA Says

Commodity

Economic

Summary:

Global oil demand will keep growing until around the end of this decade despite peaking in top importer China in 2027, as cheaper gasoline and slower electric vehicle adoption in the United States support consumption, the International Energy Agency said on Tuesday.

Despite seeing an earlier demand peak for China, the IEA, which advises industrialized countries, stuck to its prediction that global demand will peak by 2029. This view sharply contrasts with that of producer group OPEC, which says consumption will keep growing for much longer.

Oil demand will peak at 105.6 million barrels per day (bpd) by 2029 and then fall slightly in 2030, a table in the Paris-based IEA’s annual report shows. At the same time, global production capacity is forecast to rise by more than 5 million bpd to 114.7 million bpd by 2030.

A conflict between Israel and Iran has highlighted the risk to Middle East supplies, helping send oil prices up 5% to above $74 a barrel on Friday.

Still, the latest forecasts suggest ample supplies through 2030 if there are no major disruptions, the IEA said.

“Based on the fundamentals, oil markets look set to be well-supplied in the years ahead,” said IEA Executive Director Fatih Birol in a statement. “But recent events sharply highlight the significant geopolitical risks to oil supply security,” Birol said.

In a separate report on Tuesday, which included a commentary on the market impact of the Israel-Iran conflict, the IEA said the world market looks well supplied this year in the absence of a major disruption as growth in supply exceeds that of demand.

Global supply in 2025 will rise by 1.8 million bpd, up 200,000 bpd from last month, the IEA said. This is partly because OPEC+, which groups the Organization of the Petroleum Exporting Countries plus Russia and other allies, is raising output.

World demand in 2025 will rise by a much lower 720,000 bpd, the IEA said, down 20,000 bpd from last month’s forecast.

China peak

After decades of leading global oil demand growth, China’s contribution is sputtering as it faces economic challenges as well as making a big shift to EVs.

The world’s second-largest economy is set to see its oil consumption peak in 2027, following a surge in EV sales and the deployment of high-speed rail and trucks running on natural gas, the IEA said. In February, it predicted China’s demand for road and air transport fuels may have already peaked.

China’s total oil consumption in 2030 is now set to be only marginally higher than in 2024, the IEA said, compared with growth of around 1 million bpd forecast in last year’s report.

By contrast, lower gasoline prices and slower EV adoption in the United States, the world’s largest oil consumer, have boosted the 2030 oil demand forecast by 1.1 million bpd compared with the previous prediction, the IEA said.

U.S. electric vehicles are now expected to account for 20% of U.S. total car sales in 2030, down from 55% assumed last year, the report said.

Since returning to office, U.S. President Donald Trump has demanded OPEC lower oil prices and has taken aim at EVs through steps such as signing resolutions approved by lawmakers barring California’s EV sales mandates.

Source: BNN BIoomberg

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Warren Takunda

Economic

Middle East Situation

Oil prices gained more than $1 a barrel as share prices skidded in Europe and Asia on Tuesday after Israel's military issued an evacuation warning to 330,000 people in Iran's capital, Tehran. US futures also declined.

The latest alerts came as Israel warned that Iran’s capital, a city of 9.5 million, should be evacuated, and the US President Donald Trump announced he was returning from the G7 summit in Canada a day early due to the intensifying conflict.

Before leaving, Trump signed a trade deal with the UK, lowering tariffs on key British exports to the US, including cars, agricultural and aerospace products. Despite the promising news for the British economy, the main stock index in London, along with its European peers, started trading in a gloomy mood.

By midday in Europe, the FTSE 100 sank nearly 0.5%, Germany's DAX was in -1.3%, and the CAC 40 in Paris followed suit by dropping 1%. Madrid's IBEX 35 was losing 1.5% at this time.

“The UK stock market saw broad-based losses, with only six FTSE 100 stocks in positive territory. BP and Shell were among the rare risers as oil prices held firm after a recent rally,” Russ Mould, investment director at AJ Bell said.

In Germany, Rheinmetall was the biggest faller, “as investors locked in profits after a strong run for the defence group,” Mould said, adding that the current uncertainty across financial markets could bring the same fate to other “stocks or assets that have done well this year”.

After thriving on Monday, the main US stock indexes also showed signs of opening lower; the futures for the S&P 500 and the Dow Jones Industrial Average were down 0.6% after midday in Europe.

Mixed sentiment in Asia

In Asia, Tokyo's Nikkei 225 index climbed 0.6% to 38,536.74 as the Japanese central bank opted to keep its key interest rate unchanged at 0.5%.

The Bank of Japan (BOJ) has been gradually raising its rate from near zero and cutting back on its purchases of Japanese government bonds and other assets to help counter inflation.

It said economic growth was likely to moderate, and there was some weakness in consumer sentiment and housing investment.

"In particular, it is extremely uncertain how trade and policies in each jurisdiction will evolve and how overseas activity and prices will react to them," the BOJ's statement said.

Chinese shares edged lower. In Hong Kong, the Hang Seng shed 0.7% while the Shanghai Composite index was barely changed at 3,387.40.

In South Korea, the Kospi gained 0.1% to 2,950.30.

Australia's S&P/ASX 500 gave up 0.1% to 8,541.30. Taiwan's Taiex gained 0.7% and in Bangkok the SET was little changed.

Oil prices keep climbing

As Israel and Iran attack each other, the fear remains that a wider war could constrict the flow of Iran's oil to its customers. That in turn could raise gasoline prices worldwide and keep them high, though spikes in prices from previous conflicts have been brief.

Crude oil jumped 7% late last week after Israel's attack on Iranian nuclear and military targets. Early Tuesday, US benchmark crude oil gained 87 cents to $72.64 per barrel, while Brent crude, the international standard, was up 87 cents at $74.10 per barrel.

Meanwhile, the price of gold is inching lower after jumping on Friday, when investors were looking for someplace safe to park their cash. An ounce of gold fell by more than 0.3% to $3,405.

At 12h CET on Tuesday, the euro was stable against the US dollar, standing around 1.1565. The British pound has also lost slightly against the dollar, bringing the exchange rate to 1.3555. The Japanese yen first strengthened but then gave back, by midday a US dollar cost ¥144.75.

Investors have other concerns, key among them Donald Trump's tariffs, which still threaten to slow the US economy and raise inflation if Washington doesn't win trade deals with other countries.

What drives investors' hands this week?

The spectre of those tariffs was looming over the meeting of the Group of Seven (G7) meeting of major economies in Canada.

Later this week, the US Federal Reserve is set to discuss whether to lower or raise interest rates, with the decision due on Wednesday. The nearly unanimous expectation among traders and economists is that the Fed will not change interest rates.

The Federal Reserve has hesitated to lower interest rates after one cut late last year. It is waiting to see how much Trump's tariffs will hurt the economy and raise inflation, which has remained tame recently, and is near the Fed's 2% target.

More important for financial markets are forecasts for where Fed officials see the economy and interest rates heading in upcoming years.

Source: Euronews

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Adam

Economic

Middle East Situation

It is difficult to sum up the general mood in the markets on Tuesday. European stocks are extending losses as we move through the European morning session, and US equity market futures also point to a lower open. The oil price is also extending gains towards $74.50, as risk aversion takes hold once more. However, the gold price is only moderately higher. Headline risk from the Iran/ Israel conflict is once again impacting financial markets, after taking a reprieve on Monday.

Stocks are lower after Donald Trump’s abrupt departure from the G7 to monitor events in the Middle East from the White House. This suggests that things could be about escalate in this conflict. The French President initially said that President Trump was leaving due to a ceasefire between Iran and Israel, but that was rebuffed by President Trump. This has spooked financial markets on Tuesday morning.

Why oil price gains could still be capped

Since the start of last week’s attacks between Iran and Israel, the price of Brent crude has risen by $6 per barrel. This is a moderate gain considering the stakes in this conflict are high, however there is some logic in the oil market’s restraint. So far, there has been no impact on oil exports, and the strait of Hormuz is still open for oil tankers. This means that one fifth of the world’s oil supply is still flowing through the strait. Oil inventories are rising, and Iranian oil supply has not impacted by the conflict, this is why upside for the oil price could be limited on Tuesday, and gains could be capped around $75 per barrel for Brent crude.

US oil supply and Opec+’s production increases mean that conflict in the Middle East does not always trigger significant upward pressure on the oil price. However, if there was a big escalation in the conflict or if there is regime change in Iran, the oil price could be vulnerable to another pop higher.

UK – US trade deal fails to boost the pound

The other big news overnight was the US-UK trade deal announced before Trump departed the G7 meeting. This is a coup for the UK. Tariffs will be 10% for auto exports to the US and aerospace exports will not be subject to tariffs. This is the first trade deal the US has signed since the Liberation Day reciprocal tariff announcement. Although this is good news for the UK, aluminum and steel exports are currently still subject to 25% tariffs, although the US Commerce Secretary is working on putting in place a quota system for steel and aluminum exports, which the UK hopes will be generous.

Although UK stocks are lower on Tuesday, they have been saved the worst of the sell off, and the FTSE 100 is outperforming European indices. However, gains have been driven by the energy sector, with BP and Shell both rising by more than 1%. The FTSE 250 is also benefitting from the deal and is outperforming the blue-chip index so far this morning. The pound has failed to benefit from the trade deal, and it is the weakest currency in the G10 so far on Tuesday. UK bond yields are rising in line with European yields so far today.

The BOJ weighs on the yen

The yen is the one of the weakest currencies in the G10 FX space on Tuesday, even though Japanese bond yields are rising. The Bank of Japan left interest rates unchanged when they met earlier today, and the governor’s press conference was neutral. Although 2-year Japanese bond yields are rising back towards their high from April, the interest rate futures market seems unconvinced that the BOJ will hike rates again this year. There is less than one hike priced in for the BOJ for the rest of this year, and the outcome of today’s meeting is not causing the market to rush to price in rate hikes from the Bank of Japan, which is weighing on the yen.

USD/JPY is also starting to make a comeback. It has risen back above the 50-day sma at 144.00, which is a short-term bullish signal for this pair, and suggests that the yen is vulnerable to a correction and erodes its status as a safe haven currency even further.

What to expect from the Fed

Elsewhere, the focus on Tuesday is event risk from the Iran/ Israel conflict, after Donald Trump said that something ‘big’ was about to happen. Added to this, the market will be looking ahead to Wednesday’s Fed meeting. The Fed is unlikely to commit to rate cuts, and the upside risks to the oil price are likely to reinforce their message that they remain data dependent and will take a cautious approach to future rate cuts.

There is currently no chance of a rate cut priced into the market for tomorrow’s Fed meeting. There are less than 2 rate cuts priced in for the US for the rest of this year, however, tomorrow’s updated Dot Plot from the FOMC could cause movement in the US interest rate futures market. The median expectation from March was for rates to end 2025 at 3.88%, current market-based expectations are for US rates to end the year at 3.84%. Thus, the Dot Plot will need to show a big shift to the upside or the downside to have an impact on stocks, bonds and the dollar, in our view.

Source : xtb

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Glendon

Economic

Forex

A gauge of U.S. homebuilder sentiment slid unexpectedly to its lowest level in two and a half years in June, with more than a third of residential construction firms cutting prices to lure buyers sidelined by high mortgage rates and economic uncertainty due to President Donald Trump's tariffs.

The National Association of Home Builders/Wells Fargo Housing Market Index fell to 32, the lowest reading since December 2022, from 34 in May. Economists polled by Reuters had expected the sentiment score to improve to 36.

Measures of current sales conditions, future sales expectations and buyer foot traffic all fell. On a regional basis, the Northeast posted a small rise while the South, Midwest and West all declined.

"Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets," Robert Dietz, NAHB's chief economist, said in a statement. "Given current market conditions, NAHB is forecasting a decline in single-family starts for 2025."

Mortgage rates remain elevated. The average rate on the most popular home loan, the 30-year fixed-rate mortgage, was 6.84% last week, according to home finance firm Freddie Mac, squarely in the middle of the 6.60% to 7.04% range over the past six months.

"Buyers are increasingly moving to the sidelines due to elevated mortgage rates and tariff and economic uncertainty," said NAHB Chairman Buddy Hughes, a home builder and developer based in Lexington, North Carolina. "To help address affordability concerns and bring hesitant buyers off the fence, a growing number of builders are moving to cut prices."

The survey showed 37% of builders were cutting prices in June, the highest percentage since NAHB began tracking the metric on a monthly basis in 2022. That figure was up from 34% in May and 29% in April, while the average price cut held steady at 5%. The use of any kind of incentive ticked up a point to 62%.

Source: Yahoo Finance

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Adam

Economic

May Retail Sales Arrive at a Pivotal Moment for Fed Policy

U.S. May retail sales data hits at 12:30 GMT—just as the Federal Reserve begins its two-day policy meeting. With economic signals increasingly mixed, today’s numbers will help clarify whether slowing consumer activity is a temporary dip or the beginning of a broader retrenchment. Traders are watching the control group closely, as it feeds directly into GDP forecasts.

Control Group the Key as Wall Street Looks for Clarity

Expectations are modest: headline and ex-auto sales are seen rising 0.3%, with the control group also forecast at +0.3%. The control group strips out volatile components like autos, gas, building materials, and restaurants, offering the clearest view of real consumer strength. April’s decline of 0.2% in this category raised concerns that the U.S. consumer may be retreating under pressure.

Tariff-Induced Buying Spree Wears Off in May

March’s surge in vehicle and appliance sales—driven by tariff fears—skewed spending patterns. Consumers rushed to buy big-ticket items ahead of expected price hikes, leading to a 5.3% jump in auto-related sales. But those purchases weren’t repeated. Motor vehicle sales dipped 0.1% in April and are expected to remain weak in May, a drag on overall retail numbers.

Consumers Pull Back on Dining and Discretionary Spending

Receipts at food services and drinking establishments fell 1.5% in April—the sharpest drop since January 2024. This signals tightening household budgets and growing concerns over job security or inflation. Sentiment surveys reflect this shift: personal finances may be improving, but consumer confidence is falling, a combination that usually precedes spending cutbacks.

Fed Constrained as Growth Slows and Inflation Stays Elevated

The Fed remains stuck between slow growth and above-target inflation. Rates are expected to hold at 4.25%–4.50%, with a 99.9% probability priced in via CME’s FedWatch tool. But real consumer spending is projected to slow from 3.1% year-over-year in Q1 to just 1.1% by Q4. With Q1 GDP already down 0.3%, a weak May print could pressure Q2 growth further. The Atlanta Fed currently estimates a 2.1% GDP contraction for the quarter.

Market Forecast: Sideways to Bearish if Sales Miss

Markets may react unevenly. A strong beat (above 0.5%) could reinforce the Fed’s hawkish bias, lifting the dollar and pressuring bonds. In-line data (0.2%–0.4%) likely shifts focus to the Fed’s statement. A miss (below 0.2%) risks renewed volatility across equities, fixed income, and FX. Revisions to April’s data could also move markets independently.

With spending slowing, tariffs distorting behavior, and policy tightening already in place, downside risks remain dominant. Traders should stay flexible and watch closely for control group revisions and Fed tone tomorrow.

Source: fxempire

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Adam

Commodity

Economic

By midday in Europe, the FTSE 100 sank nearly 0.5%, Germany's DAX was in -1.3%, and the CAC 40 in Paris followed suit by dropping 1%. Madrid's IBEX 35 was losing 1.5% at this time.

After thriving on Monday, the main US stock indexes also showed signs of opening lower; the futures for the S&P 500 and the Dow Jones Industrial Average were down 0.6% after midday in Europe.

Mixed sentiment in Asia

In Asia, Tokyo's Nikkei 225 index climbed 0.6% to 38,536.74 as the Japanese central bank opted to keep its key interest rate unchanged at 0.5%.

The Bank of Japan (BOJ) has been gradually raising its rate from near zero and cutting back on its purchases of Japanese government bonds and other assets to help counter inflation.

It said economic growth was likely to moderate, and there was some weakness in consumer sentiment and housing investment.

"In particular, it is extremely uncertain how trade and policies in each jurisdiction will evolve and how overseas activity and prices will react to them," the BOJ's statement said.

Chinese shares edged lower. In Hong Kong, the Hang Seng shed 0.7% while the Shanghai Composite index was barely changed at 3,387.40.

In South Korea, the Kospi gained 0.1% to 2,950.30.

Australia's S&P/ASX 500 gave up 0.1% to 8,541.30. Taiwan's Taiex gained 0.7% and in Bangkok the SET was little changed.

Oil prices keep climbing

Meanwhile, the price of gold is inching lower after jumping on Friday, when investors were looking for someplace safe to park their cash. An ounce of gold fell by more than 0.3% to $3,405.

Investors have other concerns, key among them Donald Trump's tariffs, which still threaten to slow the US economy and raise inflation if Washington doesn't win trade deals with other countries.

What drives investors' hands this week?

The spectre of those tariffs was looming over the meeting of the Group of Seven (G7) meeting of major economies in Canada.

source : euronews

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Michelle

Economic

Forex

The US Industrial Production, a key indicator of the total inflation-adjusted value of output produced by manufacturers, mines, and utilities, has reported a downturn, according to recent economic data. The actual figure came in at -0.2%, marking a surprising shift in the nation’s industrial performance.

This recent figure starkly contrasts with the forecasted 0.0% change, indicating a more significant downturn than economists had predicted. The negative reading signals a contraction in the sector, a development that could be interpreted as bearish for the US dollar.

When compared to the previous figure of 0.1%, the current -0.2% actual figure underscores a clear downward trend in industrial production. This shift from a slight increase to a decrease in production could potentially signal underlying issues within the manufacturing, mining, and utilities sectors.

The importance of the Industrial Production figure is underscored by its two-star rating, indicating a significant impact on the overall economic health of the country. The decrease in production could potentially impact the US dollar’s strength, given that a higher than expected reading is typically seen as positive for the USD.

This unexpected downturn in industrial production could potentially raise concerns among investors and economists. The forecasted stability in industrial production was seen as a positive sign for the US economy, suggesting steady output from key sectors. However, the actual decrease could imply a slowdown in these sectors, potentially affecting overall economic growth.

While the immediate impact on the USD remains to be seen, the lower than expected reading could potentially influence future monetary policy decisions. As the US economy continues to navigate the complexities of the post-pandemic landscape, these figures will undoubtedly play a pivotal role in shaping the path forward.

In the face of this unexpected downturn, the focus will now turn to how the US economy responds. The coming months will provide further insight into whether this is a temporary blip or a sign of a more prolonged contraction in the industrial sector.