OPEC, the Organization of the Petroleum Exporting Countries, has maintained its forecast for relatively strong growth in global oil demand in 2024, despite lower-than-expected use in the first quarter. In its latest monthly report, OPEC stated that world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025, with both forecasts remaining unchanged from the previous month.
The report highlights that the steady global economic growth seen in the first half of 2024 is expected to continue, and OPEC projects that world oil demand will rise by 2.3 million bpd in the second half of the year. The organization attributes this to the resilience of the services sector, particularly travel and tourism, which is expected to be a significant contributor to the economic growth dynamic.
Despite lowering its estimate of total demand in the first quarter of this year by 50,000 bpd to 103.51 million bpd, OPEC increased its second-quarter forecast by the same increment and made no change to its full-year figure. This underscores the organization’s confidence in the strength of oil demand heading into the second half of 2024.
The report also noted that OPEC+, a group that includes OPEC and its allies such as Russia, has implemented a series of output cuts since late 2022 to support the market. The group recently agreed to extend the latest cut of 2.2 million bpd until the end of September and gradually phase it out from October.
While there is a wider than usual split between forecasters on the strength of oil demand growth in 2024, OPEC is sticking to its guns, as evidenced by its high-end projections. The report’s findings are in line with the recent bullish sentiment in the oil market, as evidenced by Goldman Sachs’ forecast that transport demand will push the market into a third-quarter deficit of 1.3 million bpd.
Overall, OPEC’s report suggests that the organization remains optimistic about the global oil market’s outlook, with travel and tourism expected to be a key driver of demand growth in the latter half of 2024.