An oil pump jack outside Almetyevsk in the Republic of Tatarstan, Russia. — Reuters file
OPEC on Monday revised downward its forecast for global oil demand growth in 2024, marking the third consecutive reduction in its projections. This adjustment reflects the data gathered so far this year and also lowers the projection for next year, highlighting the challenges faced by OPEC+, which includes the Organisation of the Petroleum Exporting Countries and allied nations like Russia. The group is planning to increase output in December, having previously postponed the hike due to declining prices.
In its monthly report, OPEC stated that world oil demand will increase by 1.93 million barrels per day (bpd) in 2024, down from the 2.03 million bpd growth it anticipated last month. Until August, OPEC had maintained the forecast since its initial release in July 2023. The bulk of the downgrade for 2024 was attributed to China, where OPEC reduced its growth forecast to 580,000 bpd from 650,000 bpd. Despite government stimulus measures expected to bolster demand in the fourth quarter, OPEC noted that oil consumption is being hindered by economic difficulties and the shift towards cleaner fuels.
"Diesel consumption continued to be subdued by slowing economic activity, primarily due to a slowdown in construction and housing, and the substitution of liquefied natural gas (LNG) for petroleum diesel in heavy-duty trucks," OPEC stated in reference to August.
Following the report, oil prices stabilized after an initial decline of about 2%, with Brent crude trading below $78 a barrel. Forecasters are divided on the strength of demand growth in 2024, partly due to differing views on China and the pace of the global transition to cleaner fuels. OPEC's estimates remain at the higher end of industry projections and are far above the International Energy Agency's (IEA) much lower outlook.
OPEC noted that this year's demand growth is still above the historical average of 1.4 million bpd seen before the Covid-19 pandemic, which led to a significant drop in oil usage. For 2025, OPEC reduced its global demand growth estimate to 1.64 million bpd from 1.74 million bpd.
OPEC+ has implemented several output cuts since late 2022 to stabilize the market, most of which are set to remain in effect until the end of 2025. The group was scheduled to begin unwinding the latest round of cuts, totaling 2.2 million bpd, from October but decided to postpone the plan for two months due to falling oil prices. The report indicated a production decline in September, attributed to unrest in Libya and a cut by Iraq. OPEC+ production fell to 40.1 million bpd, a decrease of 557,000 bpd from August. Iraq's production dropped to 4.11 million bpd, a reduction of 155,000 bpd but still above its 4 million bpd quota.
OPEC identified Russia and Kazakhstan among the OPEC+ countries that exceeded their production quotas. Russia reduced its output by 28,000 bpd to approximately 9 million bpd in September, according to secondary sources such as consultancies. Conversely, Kazakhstan increased its production by 75,000 bpd to 1.55 million bpd.
The OPEC report forecasts demand for OPEC+ crude at 43.7 million bpd in the fourth quarter, theoretically allowing for higher production. However, other forecasts suggest less room for growth. The IEA, representing industrialized countries, anticipates much lower demand growth of 900,000 bpd in 2024. The IEA is set to update its figures on Tuesday.
