OPEC has lowered its 2024 global oil demand growth forecast for the fifth consecutive month, marking the most significant reduction yet. This downward revision underscores China’s faltering role as the primary driver of global oil demand growth.
The weaker outlook presents a challenge for OPEC+, the alliance comprising the Organization of the Petroleum Exporting Countries and allies including Russia. In response to declining prices, OPEC+ recently postponed its planned output increase to April 2025.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/WOPG52756D6NQJ25ZVX7E62MII.jpg)
OPEC’s monthly report projects a 1.61 million barrels per day (bpd) increase in 2024 global oil demand, down from the 1.82 million bpd forecast last month. The organization also reduced its 2025 growth estimate to 1.45 million bpd from 1.54 million bpd. The 210,000 bpd reduction in the 2024 figure represents the largest of the five consecutive monthly downward revisions since August. In July, OPEC had anticipated a 2.25 million bpd increase in world demand.
“The bulk of this revision is made in the third quarter, taking into account recently received bearish data for the third quarter,” OPEC stated in the report regarding the 2024 forecast.
The downgrade reflects weaker demand in China, India, other Asian countries, the Middle East, and Africa. OPEC now anticipates a 430,000 bpd increase in Chinese oil demand for 2024, significantly lower than the 760,000 bpd projected in July. After decades of driving global oil consumption growth, China’s crude oil imports are expected to peak as early as next year due to declining transport fuel demand.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/YQEQ5QIQJVLKXB6D7M4G6M2WNY.jpg)
Following the release of the OPEC report, oil prices retreated, with Brent crude trading below $73 a barrel. Forecasts for 2024 demand growth vary significantly, largely due to differing perspectives on Chinese demand and the global transition to cleaner fuels. While OPEC’s outlook remains among the highest in the industry, recent downward revisions have brought it closer to the International Energy Agency’s (IEA) considerably lower projection.
The IEA, representing industrialized nations, forecasts 920,000 bpd demand growth in 2024 and is expected to update its figures soon. In response to market conditions, OPEC+ has implemented several output cuts since late 2022 to bolster prices. The group had initially planned to ease the most recent 2.2 million bpd cut starting in January, but this has been deferred to April 2025 due to weak demand and rising non-OPEC supply. This decision reflects the ongoing challenges faced by the oil market and the proactive measures taken by OPEC+ to maintain price stability.
/cloudfront-us-east-2.images.arcpublishing.com/reuters/6E554T4D4NNHFK2YMYR6V256FA.jpg)
In conclusion, OPEC’s latest downward revision of the 2024 global oil demand growth forecast highlights the uncertainties surrounding the global economic recovery and the evolving energy landscape. The delayed output increase by OPEC+ signifies the group’s commitment to managing market dynamics and supporting price stability amidst these challenges. The divergence between OPEC and IEA forecasts underscores the complexities in predicting future oil demand and the importance of monitoring key factors such as Chinese economic growth and the pace of the global energy transition.
