By Yara Abi Farraj

OPEC maintains oil demand forecast on resilient global economic growth, air travel growth

OPEC raised its forecast for world economic growth this year to 2.9 percent from 2.8 percent

On June 2, the alliance extended the latest output cut of 2.2 million barrels per day until the end of September

Published: Thu 11 Jul 2024, 12:53 PM

The Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast for relatively strong growth in global oil demand in 2024 and 2025, stating that resilient global economic growth and stronger demand for air travel would support fuel consumption in the summer months.

In its monthly report, OPEC maintained last month’s forecast that world oil demand would rise by 2.25 million barrels per day in 2024, and by 1.85 million barrels per day in 2025.

Oil prices rose today, extending recent gains as weakness in the dollar ahead of key U.S. inflation data benefited prices. Meanwhile, bets on tighter global supplies remained in play. Brent Oil Futures expiring in September rose 0.7 percent to $85.74 a barrel, while West Texas Intermediate crude futures rose 0.8 percent to $81.69 a barrel by 21:16 ET (01:16 GMT).

Outlook uncertain amid output cuts

Amid the transition to clean energy, oil majors have expressed contrasting views on oil demand’s outlook. On Wednesday, BP said oil demand would peak next year.

“Strong mobility and air travel in the northern hemisphere during the summer driving/holiday season is anticipated to boost demand for transportation fuels and drive growth in the United States,” OPEC said in the report.

“In addition, expected improvements in manufacturing and petrochemical activities are expected to support the demand for LPG/NGL, lending additional support to oil demand in the country,” the report added.

OPEC+, which includes OPEC and its allies like Russia, has implemented a series of output cuts since late 2022 to support crude prices. On June 2, the alliance extended the latest output cut of 2.2 million barrels per day until the end of September and said it would gradually phase cuts out from October.

Read: Sheikh Khaled witnesses signing ceremony for international partners joining ADNOC’s Ruwais LNG project

World economic growth forecasts rise

In addition, OPEC raised its forecast for world economic growth this year to 2.9 percent from 2.8 percent. Moreover, it said that there was a potential upside to that number, citing momentum outside developed countries in the Organization for Economic Cooperation and Development (OECD).

“Economic growth momentum in major economies remained resilient in H1 ’24. This trend supports an overall positive growth trajectory in the near term,” added OPEC.

OPEC’s forecasts are at the higher end of what the industry expects. While the alliance has not forecast a timeline for when demand will peak, BP expects it in the next year in its latest annual Energy Outlook.

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