In its latest monthly report, the Organization of the Petroleum Exporting Countries (OPEC) cut its global oil demand growth forecast for the fifth straight month and by the largest margin yet.
OPEC said it expects 2024 global oil demand to rise by 1.61 million barrels per day, down from 1.82 million barrels per day last month. OPEC also cut its 2025 growth estimate to 1.45 million barrels per day from 1.54 million barrels per day last month.
The 210,000 barrel-per-day cut in the 2024 figure is the largest of the five reductions OPEC has made since August. In July, OPEC expected world demand to rise by 2.25 million barrels per day.
China demand concerns persist
Steady economic growth in China, supported by sustained economic activity in India and other non-OECD consuming countries, are expected to be the major oil demand growth drivers. Within the OECD region, the Americas will likely drive demand growth amid steady jet fuel increases and robust gasoline requirements. OPEC now expects Chinese oil demand to rise by 430,000 barrels per day in 2024, down from 760,000 barrels per day in July.
“Crude oil prices averaged lower in November amid ongoing uncertainty related to geopolitical developments in key production regions, speculative activity and some concerns related to the macroeconomic outlooks in some regions,” said the report.
Renewed concerns about China’s economic outlook emerged as a key negative factor, with weak macroeconomic indicators dampening sentiment. Notably, a decline in October crude imports, subdued consumer inflation, and a sharper contraction in the producer price index highlighted the uncertainties regarding China’s economic recovery.
Non-member supply to grow
The group expects supply from outside of OPEC+ to grow by 1.3 million barrels per day in 2024, revised up slightly from last month’s assessment. OPEC attributes this rise to greater production in the US and Canada.
For 2025, the non-member supply growth will likely grow by 1.1 million barrels per day, unchanged from last month. Growth is anticipated to be mainly driven by the US, Brazil, Canada and Norway.
Read: OPEC+ extends oil output cuts until end of 2026
OPEC+ delays output increases
Earlier this month, OPEC+ delayed the reversal of its oil output cuts until the end of March 2025 and extended additional voluntary cuts until the end of December 2026 due to weak demand and rising production outside the group.
OPEC+ produces around half of the world’s oil. The group has been planning to start raising output since October 2024 but lower global demand and rising output elsewhere pushed it to postpone the plans on several occasions.
Forecasts regarding the strength of oil demand growth in 2024 vary widely due to differences in China’s demand outlook and the pace of the transition to cleaner fuels. OPEC’s outlook remains on the higher end which contrasts with the International Energy Agency’s much lower estimates. The IEA sees oil demand growth of 920,000 barrels per day in 2024. The agency will update its figures on Thursday.
