OPEC lowered its projection for next year and its forecast for global oil demand growth in 2024 on Monday, marking the producer group’s third downward revision in a row based on data received thus far this year.
The problem that OPEC+, which is made up of the Organization of the Petroleum Exporting Countries and allies like Russia, faces is highlighted by the weaker outlook. OPEC+ plans to start increasing output in December after delaying it earlier due to falling prices.
In a monthly report released on Monday, OPEC predicted that world oil demand would rise by 1.93 million barrels per day (bpd) in 2024, which was lower than the 2.03 million bpd increase it anticipated last month. OPEC had not changed the forecast since it was first made in July 2023 until August.
China represented the greater part of the 2024 downsize. From 650,000 bpd, OPEC reduced its forecast for Chinese growth to 580,000 bpd. According to OPEC, while government stimulus measures will support demand in the fourth quarter, economic challenges and a shift toward cleaner fuels are limiting oil use.
In reference to the month of August, OPEC stated, “Diesel consumption continued to be subdued by slowing economic activity, primarily a slowdown in building and housing construction, and the substitution of liquefied natural gas (LNG) for petroleum diesel fuel in heavy-duty trucks.”
Following the publication of the report, oil experienced an initial decline of approximately 2%, with Brent crude trading below $78 a barrel.
Differences regarding China and the rate at which the world is switching to cleaner fuels contribute to the wide range of opinions among forecasters regarding the magnitude of demand growth in 2024. OPEC is currently at the highest point of industry gauges and has quite far to go to match the Worldwide Energy Organization’s far lower view.
OPEC said the current year’s interest development was still over the verifiable normal of 1.4 million bpd seen preceding the Coronavirus pandemic, which caused a dive in oil use.
OPEC has decreased its forecast for global demand growth in 2025 from 1.74 million bpd to 1.64 million bpd for the coming year.
To support the market, OPEC+ has implemented a series of output cuts in Libya, Iraq, and Russia since late 2022. The majority of these cuts will remain in place until the end of 2025.
The group had planned to begin removing the most recent layer of cuts—2.2 million bpd—in October, but oil prices plummeted, forcing them to postpone the plan for two months.
According to OPEC’s report, production decreased in September as a result of unrest in Libya and a cut by Iraq. OPEC+ produced 40.1 million barrels per day, 557,000 fewer than in August. Iraq produced 4.11 million bpd, down 155,000 bpd but still exceeding its quota of 4 million bpd.
OPEC has listed Russia and Kazakhstan among the OPEC+ nations that pumped more than their quotas, along with Iraq.
According to the report, which cited data from secondary sources like consultancies, Russia decreased production in September by 28,000 bpd to approximately 9 million bpd. Kazakhstan, on the other hand, increased production to 1.55 million bpd by 75,000 bpd.
According to the OPEC report, demand for OPEC+ crude—that is, crude produced by OPEC and the allied countries that work with it—is expected to reach 43.7 million barrels per day in the fourth quarter, providing theoretical room for increased production.
Different figures propose less room. In comparison to OPEC, the IEA, which represents industrialized nations, expects demand to rise by 900,000 barrels per day in 2024. On Tuesday, the IEA is scheduled to update its figures.
