OPEC Downgrades Oil Demand Growth Forecasts for 2024 and 2025
The Organization of the Petroleum Exporting Countries (OPEC) has once again revised down its global oil demand growth forecasts for the coming years. In the group's latest monthly report, the oil demand growth forecast for 2024 was lowered from a previous estimate of 1.82 million barrels per day (b/d) to 1.61 million b/d. Additionally, the projection for 2025 was reduced from an earlier estimate of 1.54 million b/d to 1.45 million b/d.
This marks the fifth consecutive reduction in OPEC's oil demand growth forecasts, with this latest cut for 2024 being the most significant for the year. The downward revisions were a response to what the group characterized as "downward data" received for the third quarter, particularly from regions such as OECD America and OECD Asia Pacific.
The decision by the OPEC+ alliance, led by Saudi Arabia and including Russia, to delay the restart of recently halted crude oil production has also impacted the demand outlook. The group has chosen to postpone the first of a planned series of production increases for January of next year to April.
These adjustments come during a period of declining oil prices; Brent futures are trading around $73 per barrel, indicating a 17% decrease since early July. The price drops are attributed to weakening demand in China and a surge in supply from OPEC's competitors in the U.S.
While OPEC has made these adjustments, its forecasts remain higher than most other predictions in the oil sector. For instance, OPEC's growth projections for 2024 are nearly double those of financial institutions such as Morgan Stanley and Goldman Sachs Group Inc. Moreover, these estimates exceed those from the International Energy Agency and Saudi Arabia's state oil company, Aramco.
OPEC anticipates average oil consumption of 103.82 million barrels per day this year. The organization has been implementing production restrictions since 2022 to prevent oversupply and support prices. Following last week's decision, OPEC+ aims to gradually restore the halted 2.2 million b/d production by little increments from April until the end of 2026.
The repeated revisions and the current state of oil demand cast doubt on OPEC's long-term view that oil consumption will continue to grow until the middle of the century. This perspective is not widely shared within the oil sector.