OPEC and the International Energy Agency (IEA) have issued divergent forecasts for global oil demand growth in the short and medium term this week. According to reports from both organizations, OPEC remains optimistic, predicting robust growth in global oil demand for 2024 and the following year. They attribute this outlook to strong economic expansion and increased air travel, especially during the summer season.
In contrast, the IEA anticipates a slowdown in global oil demand growth to just under one million barrels per day (bpd) for both 2023 and 2024. This revision reflects a contraction in Chinese consumption during the second quarter, influenced by economic challenges.
The IEA’s latest monthly oil report noted a year-on-year increase of 710,000 bpd in global demand for the second quarter, marking the lowest quarterly rise in over a year. The agency highlighted a shift in China’s role, noting its diminishing impact on global demand growth, which is expected to drop from 70% last year to around 40% by 2024 and 2025.
For its part, OPEC maintained its forecast of robust global oil demand growth, projecting an increase of 2.25 million bpd in 2024 and 1.85 million bpd in 2025. These figures remain unchanged from their previous estimates, with expectations of strong mobility and air travel in the Northern Hemisphere driving demand, particularly in the United States.
The divergence in forecasts among oil analysts reflects broader uncertainties over the pace of global economic recovery post-COVID-19, as well as varying views on the transition to cleaner energy sources. Earlier in the week, BP had forecasted that oil demand would peak next year.
OPEC+, comprising OPEC and allied producers like Russia, has implemented output cuts since late 2022 to stabilize the market. The group recently agreed to extend a 2.2 million bpd cut until the end of September, gradually phasing it out thereafter.
Additionally, OPEC revised its global economic growth forecast for this year to 2.9% from 2.8%, citing strong momentum in major economies outside the OECD. The organization indicated potential upside risks to this projection, buoyed by resilient economic trends in key markets.
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Looking ahead, OPEC’s report suggests a potential oil supply deficit in the coming months and into 2025, a more significant shortfall compared to the forecast issued by the US Energy Information Administration earlier this week.
Oil prices saw a slight increase following a substantial decline in US crude and gasoline inventories, driven by heightened refining activity. Brent crude futures rose to $85.33 per barrel, while US West Texas Intermediate (WTI) crude futures climbed to $82.27 per barrel.
Market movements were also influenced by expectations around upcoming US inflation data releases, including the Consumer Price Index and the Producer Price Index, which could provide further market signals. Federal Reserve Chair Jerome Powell emphasized the central bank’s commitment to data-driven interest rate decisions, dispelling speculations of a September rate cut ahead of the presidential election.