The Organisation of the Petroleum Exporting Countries (OPEC) has emphasized the pivotal role of its projected 2.2 million barrels per day (mb/d) economic growth in 2024 in shaping global oil demand and supply dynamics. According to OPEC’s December monthly report, obtained by Punch Online, this projection is anticipated to significantly influence the oil market.
The report states, “Looking ahead to 2024, global oil demand is forecast to rise by a healthy 2.2 mb/d year-on-year (y-o-y).” The Organisation highlights that OECD oil demand is expected to increase by 0.3 mb/d, primarily in OECD Americas, with additional growth observed in other regions. In the non-OECD sector, a y-o-y increase of 2.0 mb/d is projected, driven by China and the Middle East, supported by Other Asia and India.
This optimistic forecast is centered on sustained economic and petrochemical activity in major consumer nations, fostering demand for transportation fuels and distillates throughout 2024.
On the supply side, the report forecasts non-OPEC supply growth at 1.8 mb/d in 2023, with the United States expected to contribute around 70% of this expansion, witnessing a y-o-y liquids production increase of 1.3 mb/d. Other contributors include Brazil, Kazakhstan, Norway, Guyana, Mexico, and China. Looking forward to 2024, non-OPEC supply is anticipated to expand by 1.4 mb/d y-o-y, driven by factors such as US tight oil output, offshore start-ups in Latin America and the North Sea, and the expansion of oil sands projects in Canada.
OPEC underscores the better-than-expected economic growth experienced in key economies during the first three quarters of the current year. The global economic forecast for 2023 is expected to be 2.9%, with a continuation of robust economic growth into 2024, forecasted at 2.6%.
In OECD economies, the report anticipates a moderation of the robust growth observed in the US, a steady trajectory in 4Q23, and throughout 2024. The Eurozone is expected to see a slight pickup in growth, and Japan’s economic growth is projected to normalize in 2H23 and throughout 2024.
The report acknowledges the leading role of the US in the growth, comprising about 44% of the total, followed by Canada, Guyana, Brazil, Norway, and Kazakhstan.
Despite an estimated 11% y-o-y increase in non-OPEC upstream sector investment to around $487 billion in 2023, the forecast predicts a slight drop to approximately $482 billion in 2024.
OPEC remains cautiously optimistic about the fundamental factors affecting oil market dynamics in 2024, citing additional voluntary adjustments by countries participating in the Declaration of Cooperation (DoC) in 1Q24 to maintain stability and balance in global oil markets. OPEC estimates a need for $12.1 trillion in investments to meet rising oil demand in the long term, emphasizing the importance of sustained investments in the oil and gas sector to prevent market volatility and support growth. OPEC Secretary General, Haitham Al Ghais, highlights the necessity of reducing greenhouse gas emissions and the need for major investments in all energy sectors for long-term sustainability.