Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Opec's headquarters in Vienna, Austria, November 30 2023. Picture: Reuters/Leonhard Foeger
London — Oil cartel Opec has cut its forecast for global oil demand growth in 2024 again, reflecting data received so far this year, and also lowered its projection for 2025.
Monday’s revision in a monthly report was Opec’s third consecutive downward revision.
The weaker outlook highlights the dilemma faced by Opec+, which includes allies such as Russia. The broader oil producing group plans to start raising output in December after earlier delaying the hike against a backdrop of falling prices.
Opec said world oil demand would rise by 1.93-million barrels per day (bpd) in 2024, down from 2.03-million bpd it expected last month. Until August, Opec had kept the forecast unchanged since it was first made in July 2023.
China accounted for the bulk of the 2024 downgrade. Opec trimmed its Chinese growth forecast to 580,000 bpd from 650,000 bpd. While government stimulus measures would support fourth-quarter demand, oil use was facing headwinds from economic challenges and moves towards cleaner fuels, Opec said.
“Diesel consumption continued to be subdued by slowing economic activity, mostly a slowdown in building and housing construction, and the substitution of liquefied natural gas (LNG) for petroleum diesel fuel in heavy-duty trucks,” Opec said in reference to August.
Oil held an earlier decline of about 2% after the report was issued, with Brent crude trading below $78 a barrel.
There is a wide split between forecasters on the strength of demand growth in 2024, partly due to differences over China and over the pace of the world's switch to cleaner fuels.
Opec is still at the top of industry estimates and has a long way to go to match the International Energy Agency’s (IEA’s) far lower view.
The oil cartel said 2024’s demand growth was still above the historical average of 1.4-million bpd seen before the Covid-19 pandemic, which caused a plunge in oil use.
Global demand growth for 2025 would be about 1.64-million bpd from 1.74-million bpd.
Libya, Iraq and Russia
Opec+ has implemented a series of output cuts since late 2022 to support the market, most of which are in place until the end of 2025.
The group was due to start unwinding the most recent layer of cuts of 2.2-million bpd from October, but decided to delay the plan for two months after oil prices slumped.
Its latest report shows production fell in September due to unrest in Libya and a cut by Iraq. Opec+ pumped 40.1-million bpd, down 557,000 bpd from August. Iraq pumped 4.11-million bpd, down 155,000 bpd but still above its 4-million bpd quota.
Iraq, Russia and Kazakhstan are among Opec+ countries that pumped above quotas, according to the report.
It projects demand for Opec+ crude at 43.7-million bpd in the fourth quarter, in theory allowing it room for higher production.
Other forecasts suggest less room. The IEA, which represents industrialised countries, sees much lower demand growth than Opec of 900,000 bpd in 2024. The IEA is scheduled to update its figures on Tuesday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Opec cuts oil demand outlook for third time
IEA is scheduled to update its figures on Tuesday
London — Oil cartel Opec has cut its forecast for global oil demand growth in 2024 again, reflecting data received so far this year, and also lowered its projection for 2025.
Monday’s revision in a monthly report was Opec’s third consecutive downward revision.
The weaker outlook highlights the dilemma faced by Opec+, which includes allies such as Russia. The broader oil producing group plans to start raising output in December after earlier delaying the hike against a backdrop of falling prices.
Opec said world oil demand would rise by 1.93-million barrels per day (bpd) in 2024, down from 2.03-million bpd it expected last month. Until August, Opec had kept the forecast unchanged since it was first made in July 2023.
China accounted for the bulk of the 2024 downgrade. Opec trimmed its Chinese growth forecast to 580,000 bpd from 650,000 bpd. While government stimulus measures would support fourth-quarter demand, oil use was facing headwinds from economic challenges and moves towards cleaner fuels, Opec said.
“Diesel consumption continued to be subdued by slowing economic activity, mostly a slowdown in building and housing construction, and the substitution of liquefied natural gas (LNG) for petroleum diesel fuel in heavy-duty trucks,” Opec said in reference to August.
Oil held an earlier decline of about 2% after the report was issued, with Brent crude trading below $78 a barrel.
There is a wide split between forecasters on the strength of demand growth in 2024, partly due to differences over China and over the pace of the world's switch to cleaner fuels.
Opec is still at the top of industry estimates and has a long way to go to match the International Energy Agency’s (IEA’s) far lower view.
The oil cartel said 2024’s demand growth was still above the historical average of 1.4-million bpd seen before the Covid-19 pandemic, which caused a plunge in oil use.
Global demand growth for 2025 would be about 1.64-million bpd from 1.74-million bpd.
Libya, Iraq and Russia
Opec+ has implemented a series of output cuts since late 2022 to support the market, most of which are in place until the end of 2025.
The group was due to start unwinding the most recent layer of cuts of 2.2-million bpd from October, but decided to delay the plan for two months after oil prices slumped.
Its latest report shows production fell in September due to unrest in Libya and a cut by Iraq. Opec+ pumped 40.1-million bpd, down 557,000 bpd from August. Iraq pumped 4.11-million bpd, down 155,000 bpd but still above its 4-million bpd quota.
Iraq, Russia and Kazakhstan are among Opec+ countries that pumped above quotas, according to the report.
It projects demand for Opec+ crude at 43.7-million bpd in the fourth quarter, in theory allowing it room for higher production.
Other forecasts suggest less room. The IEA, which represents industrialised countries, sees much lower demand growth than Opec of 900,000 bpd in 2024. The IEA is scheduled to update its figures on Tuesday.
Reuters
China’s exports miss forecasts as growth slows
Oil dips as investors take profits
Fear of intensified Middle East conflict fuels oil
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.