OPEC has reduced its forecast for global oil demand growth in 2024 for the fifth consecutive month, making its largest cut so far, following its decision to extend supply cuts. The Organization of Petroleum Exporting Countries lowered its demand growth estimate by 210,000 barrels per day, bringing the projected growth for 2024 down to 1.6 million barrels per day, according to its latest monthly report. Since July, the cartel has reduced its demand forecasts by 27%, reflecting the weakening outlook for the market.
Last week, OPEC+—an alliance led by Saudi Arabia and Russia—agreed to postpone plans to resume halted oil production and slow the pace of output increases in 2024. The first scheduled increase, initially set for January, has now been delayed until April. Since early July, oil prices have fallen by 17%, driven by economic weakness in China and a surge in supply from non-OPEC producers in the Americas. Brent crude prices are currently hovering near $73 per barrel, a level that is too low for many OPEC members, including Saudi Arabia, to meet their fiscal needs.
In its report, OPEC’s secretariat in Vienna cited “bearish data” from the third quarter, leading to downward revisions for oil demand in the OECD Americas and OECD Asia Pacific regions. Despite this series of downgrades, OPEC’s demand growth forecasts remain significantly higher than those of other major institutions, including Morgan Stanley, Goldman Sachs, and the International Energy Agency (IEA). Even Saudi Arabia’s national oil company, Aramco, has made lower growth estimates.
For 2024, OPEC expects global oil consumption to average 103.82 million barrels per day, with growth projections for 2025 also reduced by 90,000 barrels per day to 1.4 million barrels per day. The cartel’s ongoing failure to accurately predict demand trends has raised doubts about its longer-term projections, including its expectation that oil consumption will continue to grow until the middle of the century—an outlook that diverges from much of the oil industry.
OPEC+ has been limiting oil production since 2022 to prevent a surplus and support prices. Following last week’s decision, the group will gradually restore 2.2 million barrels per day of withheld output through small increments from April 2024 until the end of 2026.
