The Organization of the Petroleum Exporting Countries (OPEC) has reduced its 2024 global oil demand growth forecast for the fifth consecutive month, citing weaker-than-expected economic activity in China and other key regions.
This marks the largest downgrade yet, reflecting significant challenges for OPEC+ as it seeks to balance production amid falling prices and softening demand, Reuters news report said.
In its latest monthly report, OPEC projected global oil demand to grow by 1.61 million barrels per day (bpd) in 2024, a reduction of 210,000 bpd from last month’s estimate. This is the largest cut since OPEC began revising its forecasts in August, when it anticipated demand growth of 2.25 million bpd.
OPEC also trimmed its 2025 growth forecast to 1.45 million bpd from 1.54 million bpd.
China, traditionally a key driver of global oil demand, accounted for a significant portion of the downgrade. OPEC now expects Chinese oil demand to rise by just 430,000 bpd in 2024, sharply down from the 760,000 bpd growth anticipated in July. Slowing economic activity and a potential peak in transport fuel demand are contributing factors.
India, other Asian nations, the Middle East, and Africa also saw demand expectations reduced.
Following the release of the report, Brent crude prices fell, trading below $73 per barrel. The revisions highlight the challenges OPEC+ faces as it navigates a market influenced by sluggish demand, competition from cleaner energy sources, and rising oil supply from non-OPEC producers.
OPEC vs. IEA: Aligning Forecasts
OPEC’s revised outlook is now closer to that of the International Energy Agency (IEA), which represents industrialized nations. The IEA has forecast 2024 demand growth at a far lower 920,000 bpd. The agency is set to update its figures on Thursday.
OPEC+ Production Cuts Extended
In response to the weakening market, OPEC+ has implemented a series of production cuts since late 2022. Most recently, the group delayed plans to ease its 2.2 million bpd output reductions until April 2025. This move aims to support prices amid ongoing demand concerns and increased supply from non-OPEC producers.