Opec cuts oil demand forecast again for 2024 and 2025

Group's production rose to 26.53 million bpd in October

Storage tanks at Kinder Morgan Terminal in California. Opec had lowered its oil demand forecast for next year. Reuters

Opec has revised down its forecast for oil demand growth this year based on data from China, India and other regions, while also lowering its estimate for 2025, marking the producer group’s fourth consecutive downwards adjustment.

Global oil demand growth forecast for 2024 has been reduced by 107,000 barrels per day, now projected to increase by 1.8 million bpd compared to the previous year, Opec said in its monthly market report on Tuesday.

While demand in regions such as the Americas and Europe has been given an upwards revision, weaker-than-expected performance in China, India and other Asian and Eurasian regions has led to a downwards adjustment, the group said.

Despite the forecast cuts, Opec expects strong demand for transport fuel this year.

“Total world oil demand is anticipated to reach 104 million in 2024, bolstered by strong transportation fuel demand and ongoing healthy economic growth,” Opec said.

“Similarly, refinery capacity additions and petrochemical margins – mostly in China and the Middle East – are expected to contribute to oil demand growth.”

For 2025, Opec now projects oil consumption to increase by 1.5 million bpd, down 103,000 bpd from its previous forecast.

The latest data brings Opec's oil demand growth projections closer to the International Energy Agency's estimates for 2024 and 2025.

The Paris-based agency has predicted a significant slowdown in global oil demand growth, with an estimated increase of fewer than 900,000 bpd this year, and a growth of 1 million bpd in 2025.

China, the main driver of global oil demand growth in 2023, is now experiencing an economic slowdown due to a weak property market, sluggish consumer spending and a decline in manufacturing activity.

Last week, Beijing announced a 10 trillion-yuan stimulus package to support local governments, as the country braces for potential pressure from Donald Trump's re-election as US president, with threats of additional tariffs on Chinese goods.

Fitch Ratings said the latest fiscal measures, while potentially beneficial in the long term, are unlikely to spur immediate economic growth or alleviate deflationary pressures.

The ratings agency expects a larger budget deficit of 7.1 per cent of GDP in 2024, compared to the previous year’s 5.8 per cent.

China’s slowdown has weighed on oil prices this year, with Brent, the international benchmark, falling about 21 per cent since hitting a high of $91 a barrel in April, despite production cuts and geopolitical tensions stemming from the Middle East.

This month, eight Opec+ member countries agreed to extend voluntary production adjustments of 2.2 million bpd for a month until the end of December.

Opec’s crude output rose 466,000 bpd month-on-month to 26.53 million bpd in October, mainly on increased production in Libya, Nigeria and Democratic Republic of the Congo, the group said, citing secondary sources.