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OPEC has stuck to its forecast for relatively strong growth in global oil demand in 2024 and 2025, citing resilient economic growth and strong rebound in air travel in the summer months. In its latest Monthly Oil Market Report (MOMR), OPEC has predicted that global oil demand would rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both figures remain unchanged from its first forecast in January 2024. Similarly, on the supply side, the group has kept its non-OPEC+ liquids supply growth estimate unchanged at 1.23 mn b/d for 2024 and 1.10 mn b/d for 2025. Non-OPEC+ growth will mostly be driven by the U.S., Canada and Brazil. According to an average of secondary sources, OPEC+ crude production fell by 125,000 b/d to 40.8 mn b/d in June. That’s good for 2.3 mn b/d below OPEC’s projected call on OPEC+ crude.
“Expected strong mobility and air travel in the Northern Hemisphere during the summer driving/holiday season is anticipated to bolster demand for transportation fuels and drive growth in the United States,” OPEC said in the report.
The gap between forecasts by OPEC and other energy agencies has grown in recent months, with both the EIA and IEA downgrading their oil demand growth estimates for the current year. The EIA has predicted that global oil demand will increase by 1.1 mn b/d in 2024 while the IEA sees even lower growth at 960,000 b/d.
OPEC has lamented a hawkish stance by the U.S. Federal Reserve, saying that its cautious approach to monetary policy and the high interest rate environment have increased costs of capital, particularly in the US market, thus limiting investment in upstream exploration and production. Further, it notes that high interest rates have strengthened the U.S. dollar, resulting in higher prices for oil and other commodities. However, OPEC has expressed optimism that the Fed could begin to cut rates in the latter half of the year amid a strong economy and a downward trend in global inflationary pressures.
“Economic growth momentum in major economies remained resilient in the first half. This trend supports an overall positive growth trajectory in the near term,” OPEC said.
