OPEC has reaffirmed its expectations for strong global oil demand growth in 2024 and 2025, predicting an increase of 2.25 million barrels per day (bpd) next year and 1.85 million bpd in 2025. These forecasts, unchanged from last month, are driven by robust economic performance and heightened summer air travel, especially in the Northern Hemisphere, which is expected to boost demand for transportation fuels, particularly in the United States.
Despite varying forecasts from different analysts regarding oil demand, largely due to uncertainties surrounding the shift towards cleaner energy sources, OPEC’s projections are at the higher end of industry expectations. BP, for example, anticipates oil demand peaking next year, a sentiment echoed in its latest Energy Outlook. In contrast, the International Energy Agency (IEA) foresees much lower growth in demand for 2024, projecting an increase of 960,000 bpd, with an updated forecast anticipated soon.
OPEC+, which includes OPEC and non-member allies like Russia, has been implementing production cuts since late 2022 to stabilize oil prices. The latest reduction of 2.2 million bpd is scheduled to begin phasing out in October. OPEC has also revised its global economic growth forecast for 2023, raising it from 2.8% to 2.9%, citing strong economic momentum in non-OECD countries.
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In recent discussions, OPEC+ members reiterated their commitment to stabilizing oil markets. They agreed to extend the supplementary cuts of 1.65 million bpd announced in April 2023 until December 2025.
The report also underscores expectations of an oil supply deficit in the coming months and into 2025, which is more pronounced compared to projections from the U.S. Energy Information Administration. Demand for OPEC+ crude is anticipated to reach 43.6 million bpd in the third quarter, surpassing current production levels.