OPEC has revised its forecasts for global oil demand growth downward for both this year and next, citing weaknesses in key markets such as China and India. This marks the fourth consecutive reduction in the 2024 outlook for the organization.
Key Highlights:
OPEC now projects that world oil demand will increase by 1.82 million barrels per day (bpd) in 2024, down from the previously estimated 1.93 million bpd.
The 2025 global demand growth estimate has also been lowered to 1.54 million bpd, down from 1.64 million bpd.
Impact of China:
The downgrade is primarily attributed to China, where OPEC has reduced its growth forecast from 580,000 bpd to 450,000 bpd. The report noted a decline in diesel usage for the seventh consecutive month, driven by a slowdown in construction and weak manufacturing activity.
Market Reactions:
Following the report, oil prices saw a decline, with Brent crude trading below $73 per barrel. The report highlights the ongoing challenges OPEC+ faces, particularly with falling prices and rising supply from outside the group.
Comparative Forecasts:
OPEC’s demand growth estimates remain significantly higher than those of the International Energy Agency (IEA), which anticipates a growth of only 860,000 bpd for 2024. The IEA is expected to update its figures on Thursday.
OPEC+ Production Adjustments:
OPEC+ has implemented a series of output cuts since late 2022 to stabilize prices, with most cuts extending until the end of 2025. Recently, the group decided to delay the planned unwinding of the most recent cuts of 2.2 million bpd due to weak demand and rising supply pressures.
Production Insights:
OPEC’s output has increased, with October production rising to 40.34 million bpd, an increase of 215,000 bpd from September. Notably, Libya’s production has rebounded, while Iraq has adjusted its output closer to its quota of 4 million bpd.
Quota Compliance:
OPEC has indicated that countries like Russia and Kazakhstan have also exceeded their production quotas, with Russia’s output rising slightly to about 9.01 million bpd.