OPEC Cuts Global Oil Demand Growth Forecasts
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OPEC trimmed its forecasts for oil demand growth this year and next for a third consecutive month as the group belatedly recognizes a slowdown in global fuel use.
Global oil consumption will increase by 1.9 million barrels a day — roughly 2% — in 2024, or 106,000 barrels a day less than previously forecast, the Organization of Petroleum Exporting Countries said in its monthly report. The revision was “largely due to actual data received combined with slightly lower expectations” for some regions, it said.
With the three successive downgrades, OPEC is starting to retreat from the strongly bullish projections it has held throughout this year. Even after the reductions, its demand estimates remain an outlier — above Wall Street banks and trading houses, and at the top end of the range expected by Saudi Arabia’s oil company, Aramco. It’s roughly double the rate seen the International Energy Agency.
The actions of OPEC members themselves suggest a lack of confidence in the outlook of its Vienna-based secretariat, delaying their plans to restore halted crude production even as the cartel’s forecasts point to a major supply deficit.
Led by Saudi Arabia, OPEC and its allies are due to begin gradually restoring 2.2 million barrels a day in monthly tranches from December — two months later than originally planned. Market-watchers such as JPMorgan Chase & Co. and Citigroup Inc. remain skeptical that they’ll proceed amid slowing growth in top consumer China and swelling supplies from the Americas.
While crude prices have been boosted by conflict in the Middle East, at $77 a barrel they’re too low for some OPEC nations. The coalition’s efforts to shore up prices have been undermined by countries that have failed to deliver their cutbacks — notably Iraq, Kazakhstan and Russia.
The report also showed Iraq belatedly making progress in implementing its share of output cuts due since the start of the year, while still pumping above its agreed quota.
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Baghdad curtailed production by 155,000 barrels a day in September to 4.112 million per day, getting closer its target of 4 million while staying above it — and still making no progress in the extra cuts it promised to compensate for overproduction. An Iraqi official said at the weekend that output is below the quota.
Kazakhstan increased production by 75,000 barrels a day to 1.545 million, flouting its pledge to perform better. Russia reduced by 28,000 per day but also remained above its ceiling, at approximately 9 million a day.
OPEC+ is expected to make a decision on its scheduled December output hike in the coming weeks. The alliance is due to meet on Dec. 1 to consider output policy for 2025.
