Key Points
- OPEC cut its 2024 global oil demand growth forecast to 2.03 million bpd, down from 2.11 million bpd.
- China’s demand growth estimate lowered to 650,000 bpd due to economic challenges and a shift towards cleaner energy.
- OPEC+ is facing challenges in managing the oil market, and plans to increase production have been delayed following recent price declines.
- OPEC also trimmed its 2025 demand growth forecast from 1.78 million bpd to 1.74 million bpd.
OPEC has revised its global oil demand growth forecast for 2024 for the second month in a row, reflecting a slower-than-expected pace of demand recovery. In its latest monthly report released on Tuesday, OPEC projected that global oil demand would increase by 2.03 million barrels per day (bpd) in 2024, a decrease from the 2.11 million bpd forecast made in the previous month.
The downgrade underscores the ongoing challenges faced by OPEC+, a coalition of the Organization of the Petroleum Exporting Countries and allies, including Russia, as they navigate market dynamics amid fluctuating demand.
The adjustment in the forecast is largely attributed to China, where demand growth is now expected to reach 650,000 bpd in 2024, down from the earlier projection of 700,000 bpd. China’s economy faces significant challenges, including a slowdown in the real estate sector and an increased shift towards cleaner energy solutions, such as LNG trucks and electric vehicles. These factors are expected to reduce the country’s diesel and gasoline consumption, contributing to the downward adjustment in demand growth.
Despite these challenges, OPEC noted in its report that China’s economic growth remains robust, although structural shifts towards sustainability will likely impact oil demand. The broader implications of these trends are felt across the global market as OPEC and its allies continue to fine-tune their production strategies. Recently, OPEC+ decided to delay plans to increase oil output after prices reached their lowest levels of the year, highlighting the group’s cautious approach in response to market conditions.
For 2025, OPEC also revised its global oil demand growth estimate, trimming the forecast to 1.74 million bpd from 1.78 million bpd. This conservative outlook reflects broader concerns about the pace of global economic recovery and the potential for continued shifts toward alternative energy sources.
Adding to the cautious sentiment, Morgan Stanley analysts lowered their Brent crude oil forecasts for this week’s upcoming quarters, citing a period of demand weakness in the global oil market. The bank’s revised outlook aligns with OPEC’s cautious stance, reinforcing the view that economic headwinds and evolving energy trends are set to influence oil demand trajectories in the coming years.
