OPEC Maintains 2024 Oil Demand Growth Forecast Despite Early Year Setback.
The Organization of the Petroleum Exporting Countries (OPEC) on Tuesday upheld its forecast for robust growth in global oil demand for 2024, despite a weaker-than-expected performance in the first quarter. The organization predicts that travel and tourism will drive consumption in the latter half of the year.
In its monthly report, OPEC projected that world oil demand will increase by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, maintaining its previous forecasts. This aligns with other positive market outlooks, as oil prices rose by 3% on Monday following Goldman Sachs’ prediction that transport demand would lead to a third-quarter market deficit.
OPEC noted that global economic growth remained steady in the first half of 2024, with expectations that oil demand will rise by 2.3 million bpd in the second half. “Globally, the services sector maintains a stable momentum,” OPEC stated. “It is projected to be the main contributor to the economic growth dynamic in the second half of 2024, particularly supported by travel and tourism, with a consequent positive impact on oil demand.”
OPEC+, a coalition that includes OPEC members and allies such as Russia, has implemented output cuts since late 2022 to stabilize the market. On June 2, the group agreed to extend the latest cut of 2.2 million bpd until the end of September, with plans to phase it out gradually starting in October.
Following the report’s release, oil prices remained stable, with Brent crude slightly decreasing to around $81 a barrel.
There is considerable variation among forecasters regarding the strength of oil demand growth in 2024, partly due to differing views on the pace of the global transition to cleaner fuels. OPEC remains on the optimistic end of these forecasts. Despite lowering its estimate for total demand in the first quarter by 50,000 bpd to 103.51 million bpd, OPEC increased its second-quarter forecast by the same amount and kept its full-year figure unchanged.
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The International Energy Agency (IEA), representing industrialized countries, forecasts much lower demand growth of 1.1 million bpd and is expected to update its outlook on Wednesday. Goldman Sachs anticipates a third-quarter deficit of 1.3 million bpd due to strong summer transport demand, while OPEC’s figures suggest an even larger supply-demand gap.
OPEC’s report indicated that demand for OPEC+ crude is projected at 43.6 million bpd in the third quarter, significantly more than the group’s current production levels. In May, OPEC+ pumped 40.92 million bpd, a decrease of 123,000 bpd from April, with declines in Russia and Kazakhstan offsetting increases in Nigeria and smaller African producers.
