OPEC trimmed forecasts for global oil demand this year and next as the cartel and its allies prepare to decide on next quarter’s planned supply increase. The Organization of Petroleum Exporting Countries lowered projections for world demand growth in 2024 by 135,000 barrels a day, according to a monthly report. It’s the first significant change to a forecast that remains considerably higher than the rest of the petroleum industry.
Led by Saudi Arabia, OPEC and its partners must decide in coming weeks whether to press on with plans to revive halted production starting October. At a review meeting earlier this month, the alliance reiterated it could “pause or reverse” the increase, “depending on prevailing market conditions.”
Oil prices have gyrated in recent weeks as concerns over escalating geopolitical tensions in the Middle East were offset by signs of faltering economic growth in China and the US, the world’s biggest consumers. Brent futures are trading near $80 a barrel, too low for many OPEC+ members to cover government spending.
“This slight revision reflects actual data” for the first and second quarters, “as well as softening expectations for China’s oil demand growth in 2024,” OPEC’s Vienna-based secretariat said.Even with the reduction, the organization still sees oil consumption expanding this year by a “healthy” 2.1 million barrels a day, to average 104.3 million a day.
Its projections remain higher than typical pre-pandemic growth levels, and above the expectations of many major trading houses and Wall Street banks. OPEC’s estimates are more than double those of the International Energy Agency, and at the top end of the range anticipated by Riyadh’s oil giant, Saudi Aramco.
OPEC+ has been restraining production for almost two years in a bid to avert a surplus threatened by surging supplies from across the Americas, led by the US, Brazil and Guyana. It provisionally plans to revive roughly 543,000 barrels a day in the fourth quarter, the first stage in bringing back 2.2 million a day by late 2025.
Based on OPEC’s data, the coalition could comfortably start restoring oil supplies from October without destabilizing the market. The report estimates that an average of 43.8 million barrels a day will be required from the 23-nation group in the final quarter of the year, or 1.4 million a day more than during the second.
Yet the cartel has sometimes set policies that are at odds with its forecasts, which have at times proven inaccurate. Late last year, the group announced deeper output curbs at the same time that its data was indicating a record inventory squeeze, which never materialized.
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