OPEC, the 12-nation oil group, has maintained its global oil-demand growth forecast for 2024 and 2025, citing upside potential in the second half of the year due to a resilient global economy and potential easing of monetary policies. The organization expects oil demand to increase by 2.2 million barrels a day this year and by 1.8 million barrels a day in 2025. Additionally, OPEC reported a decline in crude output and is set to announce its next production policy move at the upcoming meeting in June.
In April, OPEC’s crude oil production decreased by 48,000 barrels a day to 26.575 million barrels a day, with global oil demand rising by 2.4 million barrels per day in the first quarter of 2024. The total world oil demand for the year is projected to reach 104.5 million barrels per day, driven by factors such as strong air travel demand, road mobility, and industrial activities in non-OECD countries. OPEC highlighted the resilience of the global economy in the first quarter of the year, with stable growth and exceeding initial projections in certain key economies.
While maintaining its world economic growth forecasts for 2024 and 2025 at 2.8% and 2.9% respectively, OPEC slightly raised its estimates for the US economy for this year and next. The organization now expects the US economy to grow by 2.2% in 2024 and 1.9% in 2025. Despite some downside risks, OPEC believes that the positive momentum observed at the beginning of the year could lead to additional upside potential for global economic growth in the future.
Oil prices remained relatively stable as OPEC confirmed its global oil demand forecasts, with investors awaiting US inflation indicators. Brent crude futures fell 9 cents to $83.27 a barrel, while US West Texas Intermediate (WTI) crude futures also lost 9 cents to $79.03 a barrel. Despite this, signs of improving demand in the US and China, the top two oil consumers globally, led to a significant daily gain for both Brent and WTI recently.
OPEC+ has implemented various output cuts to support the market, with the latest cut of 2.2 million barrels per day scheduled to continue until the end of June. The group is considering extending the production cut beyond June. Supply from producers outside of OPEC+ is expected to grow in the coming years, driven by countries such as the US, Brazil, Canada, and Norway. Meanwhile, the International Energy Agency forecasts a peak in oil demand by 2030 and is set to update its figures soon.
OPEC remains optimistic about the future of oil demand, projecting growth for the next two decades without forecasting a peak. The organization has also decided to stop publishing a calculation of the world’s demand for its own crude, focusing instead on demand for oil from OPEC+. This move aims to demonstrate solidarity and unity within the OPEC+ framework and avoid potential misunderstandings. OPEC believes that the continued collaboration through the Declaration of Cooperation (DoC) pact since 2016 is essential for maintaining stability in the oil market.
