Opec retains demand forecasts amid economic growth

Opec has stuck to its oil demand growth projections for 2024 and 2025 but expects the world economy to expand at a faster pace this year, driven by the US and India.

The group has forecast oil demand growth of 2.2 million barrels per day for this year and 1.8 million bpd for 2025.

Both were unchanged from last month’s assessment, Opec said in its latest monthly oil market report.

However, Opec raised its estimate for global economic growth this year to 2.8 per cent, from 2.7 per cent previously, citing “robust” expansion in economic activity in the second half of this year. “While the US, India and, to some extent, Brazil showed strong growth in 2H23, with China and Russia at steady levels towards the end of the year, the eurozone and Japan experienced a decline,” the group said yesterday.

“However, some tentative signals suggest a potential economic growth rebound in the latter two economies, indicating a continued sound trend in [the first quarter of 2024].”

Non-Opec crude production this year is now projected to grow by 1.1 million bpd, down by 120,000 bpd from last month’s estimate.

The forecast cut is due to the extension of additional voluntary output curbs into the second quarter, the group said.

This month, several members of the Opec+ group of oil producers, including Saudi Arabia, the UAE and Kuwait, announced that they were extending oil output cuts of 2.2 million bpd as part of efforts to support market balance and stability.

Production by core Opec members, which now excludes Angola, increased by 203,000 bpd in February from the month before to average 26.57 million bpd, the group said.

Francisco Blanch, Bank of America’s head of global commodities, told The National last week that Opec was continuing to pursue “its policy of announcing cuts or cut extensions right before customers come in with orders for the following month, and makes decisions that are data dependent. The group is indeed more bullish on demand than the International Energy Agency”.

The agency expects demand to grow by 1.2 million bpd this year due to higher supply from non-Opec sources and a slowdown in Chinese consumption.

“We believe it is likely that [Opec’s] voluntary production cuts will stay in place if global demand growth stays in the 1.2 million bpd range as opposed to Opec’s own demand growth forecast of 2.2 million bpd,” Mr Blanch said.

On Monday, Opec secretary general Haitham Al Ghais said that eliminating oil use would affect global growth, hurt millions of jobs and destroy industries that rely on the fuel.