Opec has lowered its oil demand growth forecast for 2024 and 2025 for the second consecutive month amid signs of slowing consumption in major economies.
Global oil demand growth forecast for this year is now predicted to reach 2 million barrels per day, down 80,000 bpd from the group’s previous estimate, Opec said in its monthly oil market report on Tuesday.
The revision in numbers mainly reflects the latest data, Opec said, noting that the growth of 2 million bpd remains “well above” the historical average of 1.4 million bpd before the Covid-19 pandemic.
Opec expects oil demand in OECD (Organisation for Economic Co-operation and Development) countries to grow by 0.1 million bpd in 2024, down from its previous estimate of a 0.2 million bpd increase.
Meanwhile, oil consumption in non-OECD nations is projected to grow by more than 1.8 million bpd this year, which is lower than Opec's earlier forecast of about 1.9 million bpd.
The producer alliance also lowered its forecast for 2025 crude demand growth to 1.74 million bpd, down from 1.78 million bpd.
The forecast cut comes as China, the world’s second-largest economy and top crude importer, faces challenges from a real estate crisis, sluggish consumer spending and a slowdown in manufacturing.
The country’s second-quarter GDP growth slowed to 4.7 per cent on an annual basis, from 5.3 per cent in the first quarter.
“Looking ahead, China’s economic growth is expected to remain well supported,” Opec said.
“However, headwinds in the real estate sector and the increasing penetration of [liquefied natural gas] trucks and electric vehicles are likely to weigh on diesel and gasoline demand going forward.”
Last week, the Opec alliance extended voluntary oil output cuts of 2.2 million bpd until the end of November amid a drop in crude prices over concerns of slumping demand.
Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman will pause the scheduled increases of 180,000 bpd in October and November, Opec said at the time.
The group also said further extensions and renewed cuts were on the table, should market conditions demand them.
Production by Opec’s 12 members averaged 26.59 million bpd last month, 197,000 bpd lower than in July, the group said on Tuesday.
Crude oil output increased mainly in Nigeria, Republic of Congo and Venezuela, while production in Libya, Iraq and Saudi Arabia decreased.
Libya is currently in the midst of a political crisis that has caused its production to more than halve.
Oil prices fell on Tuesday as the threat of a supply disruption in the US from a tropical storm was overshadowed by concerns about weakening oil demand.
Brent, the benchmark for two thirds of the world’s oil, was trading 1.32 per cent lower at $70.89 a barrel at 4.25pm UAE time, while West Texas Intermediate, the gauge that tracks US crude, was down 1.38 per cent at $67.76 a barrel.