The Organisation of Petroleum Exporting Countries (Opec) has slashed its oil demand forecast for 2025, amid the market uncertainty stemming from the sweeping tariffs announced by the administration of US President Donald Trump and contradicting the rosier picture painted by his Energy Secretary.
Oil demand growth was revised down to 1.3 million barrels per day, with the growth a "minor adjustment" that is mainly based on the expected impact of tariffs on the market, the Vienna-based body said in its report on Monday. Demand is expected to grow by 40,000 barrels per day, it said.
Demand in countries outside the Organisation for Economic Co-operation and Development (OECD) is projected to increase by nearly 1.25 million barrels per day, mainly to be supported by demand from China, the world's second-largest economy and largest consumer of energy, it said.
For 2026, Opec slightly revised its global demand growth forecast to about 1.3 million bpd. Demand in the OECD is expected to grow by about 100,000 bpd, while non-OECD countries will log an increase of 1.2 million bpd.
"In the OECD, oil demand is expected to be pressured by the likely impact of the new US tariffs on imports," Opec said. "In the non-OECD, despite having been burdened with considerable tariffs by the US, China is expected to drive oil demand, supported by strong mobility and industrial activity."
Opec's projections run counter to the US's view on the market: the world's largest economy and second-largest consumer of energy foresees "very strong" long-term growth in oil and gas demand, US Energy Secretary Chris Wright said in Abu Dhabi last week, without specifying a time period for the forecast.
Opec also downgraded its projections for global economic growth, forecasting a 3 per cent expansion this year and 3.1 per cent in 2026.
Oil, much like the stock markets, bore the brunt of Mr Trump's tariffs in their immediate aftermath of their announcement. Prices had plunged to their lowest levels in more than three years on April 4, as China hit back against the US tariffs with its own additional levies on American goods.
They plunged further on Wednesday after Mr Trump increased tariffs on China, nearing levels seen during the tail-end of the worst of the Covid pandemic four years ago, intensifying the market mayhem.
Prices have since rebounded. Brent, the benchmark for two-thirds of the world's oil, was up 1.22 per cent at $65.55 a barrel as of 4.20pm UAE time on Monday. West Texas Intermediate, the gauge that tracks US crude, added 1.32 per cent to $62.31. However, analysts have downgraded their projections for oil in 2025, citing vital factors such as soft demand, uncertainty from Opec supply and a decline in US shale stash.
The Swiss lender UBS reduced its Brent price forecasts by $12 a barrel to $68, while WTI has been lowered to $64 per barrel. Goldman Sachs, the fifth-largest US bank by assets, expects Brent and WTI to edge down and average $63 and $59 a barrel, respectively, for the remainder of 2025, then fall further to $58 and $55 in 2026.
"US tariffs and the trade war between the US and China will likely weigh on economic growth this year and are likely to result in oil demand growing at a slower speed this year," Giovanni Staunovo, a strategist at UBS, wrote in a note on Monday.