Organization of the Petroleum Exporting Countries (OPEC) has announced a big cut to its forecast for how much oil the world will need in 2024.
According to a publication by Reuters, spotted by The High Street Journal, OPEC now expects global oil demand to grow by 1.61 million barrels per day (bpd) instead of the 1.82 million bpd it predicted earlier.
This marks the fifth time OPEC has reduced its forecast, highlighting the challenges it faces with slow demand from key countries like China, which used to be the main driver of oil consumption worldwide.
The 210,000 bpd cut is the largest adjustment OPEC has made since August. Back in July, OPEC had a much more optimistic outlook, expecting demand to grow by 2.25 million bpd in 2024. However, new data, particularly from the third quarter of this year, has painted a less positive picture.
China, which was once the world’s largest crude oil importer, has played a big role in this decline. OPEC now expects China’s oil demand to grow by only 430,000 bpd in 2024, a sharp drop from the 760,000 bpd it predicted in July. Other regions like India, parts of Asia, the Middle East, and Africa are also expected to need less oil than previously thought.
There’s also a belief that China’s crude oil imports could peak as soon as 2025. This means the country may start buying less oil as the demand for transport fuels like petrol declines.
If this happens, it will change global oil consumption patterns in the years to come. After this announcement, oil prices fell, with Brent crude trading below $73 per barrel.
OPEC+ Delays Plans to Increase Oil Supply
OPEC+, which includes OPEC members and allies like Russia, is also facing tough times. The group has been reducing oil production since late 2022 to keep prices from falling.
On December 5, it announced that its plan to increase oil production in January 2024 will now be delayed until April 2025. This decision was made because oil demand remains weak and there is more supply coming from countries outside OPEC+.
Comparing Predictions from OPEC and the IEA
OPEC’s predictions about oil demand are still more optimistic than those of the International Energy Agency (IEA), which represents industrialized nations.
According to the publication, the IEA expects global oil demand to grow by just 920,000 bpd in 2024, much less than OPEC’s forecast. The IEA is set to release updated figures soon, which could give a clearer picture.
These changes show that global oil markets are going through major shifts. As countries move towards cleaner energy and reduce their reliance on oil, the demand for fossil fuels is becoming harder to predict.
