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As uncertainty over global crude oil demand continues to hang over the market, even one of its most bullish forecasters – the Organization of Petroleum Exporting (OPEC) – has now lowered its demand growth forecasts for both 2024 and 2025.
For nearly a year, both it and the think-tank International Energy Agency (IEA) have been at loggerheads over their respective divergent global demand growth projections.
But on Monday, OPEC said global oil demand growth will come in lower at 2.11 million barrels per day (bpd) for 2024, down from its growth expectations of 2.25 million bpd published last month. The revision, made via its monthly oil market report, was its first downward move for 2024 growth projections since July 2023.
OPEC also revised its forecast for 2025 down to 1.78 million bpd from 1.85 million bpd previously. While both revisions still have OPEC projections at the higher end of market, they are an acknowledgement by the producers’ group that global demand is not what it used to be.
“Th8is slight revision reflects actual data received for the first quarter of 2024 and in some cases for the second quarter, as well as softening expectations for China’s oil demand growth in 2024,” OPEC said.
China’s lower crude consumption is something much of Wall Street and the IEA have been flagging for quite some time now to varying degrees. A lackluster economic performance by the the world’s biggest oil importer and second biggest oil consumer is hard to ignore.
On Tuesday, in its monthly market report, the IEA also left its far lower 2024 forecast as is but revised its 2025 forecast even lower. According to the think-tank, demand will rise by 950,000 in 2025, down 30,000 bpd from the previous forecast. This year’s (unchanged) growth figure is predicted to be 970,000 bpd.
Unsurprisingly, it too blamed uncertainty in China for its bearish projections. “Weak growth in China, following the post-Covid surge of 2023, now significantly drags on global gains,” the IEA noted.
Essentially, this year’s headline markers in the sand haven’t changed for either forecaster. For IEA growth will be below 1 million bpd and for OPEC above 2 million bpd. But for argument’s sake, even if the market were to assume that the actual growth figure for 2024 would be somewhere in the modest middle at 1.5 million bpd or an average of both projections – we would still be looking at a surplus in 2024.
Even then, barring any unforeseen developments, the higher, lower and average growth projections can all be serviced more or less by non-OPEC, especially U.S., supply growth alone in 2024.
And it is not just the U.S. that is seeing a higher output. Production in Brazil, Canada, Norway and Guyana – the newest member of the non-OPEC crude producers’ roster – is rising at a canter.
For a while it was looking like the world’s light sweet crude supply may be in surplus territory come the end of the year. But now it is looking highly likely that the whole crude market may see a surplus, as higher supply is met with relatively lower demand.
