OPEC remains bullish on global oil demand growth in 2024-25
Muscat – The Organization of Petroleum Exporting Countries (OPEC) remains bullish on global oil demand growth in the next two years but has nudged down the quantity of crude its members must produce to balance the market, according to the latest edition of OPEC'S Monthly Oil Market Report.
The 12-member oil producers' group sees worldwide oil demand rising by 2.25mn barrels per day (bpd) in 2024 and 1.85mn bpd in 2025, OPEC said as reported by S&P Global Commodity Insights.
The predictions are unchanged from January 2024.
In total, global liquids consumption will reach 104.4mn bpd this year and 106.25mn bpd in 2025, up 40,000 bpd each month on month, the report said.
However, the organisation lowered the 'call' on its crude – the amount OPEC would have to pump to balance global supply with demand – by 90,000 bpd in 2024 and 110,000 bpd in 2025, compared with January's estimates.
OPEC output will need to hit 28.38mn bpd in 2024 and 28.85mn bpd in 2025, the bloc now predicts, S&P Global Commodity Insights reported.
Both predictions remain well above current OPEC production, giving the group a strong hand to influence prices the forecasts come to pass. In the report, OPEC said its members had pumped 26.34mn bpd in January, down slightly from 26.69mn bpd in December.
NON-OPEC output
The OPEC report forecasts that NON-OPEC oil production will rise 1.19mn bpd in 2024 and by 1.27mn bpd in 2025, with the latter unchanged month on month, according to S&P Global Commodity Insights.
NON-OPEC producers including the US, Canada, Brazil and Guyana have stepped up output in recent months, reducing the bloc's market share and constraining its capacity to support prices.
By contrast, OPEC and its Russia-led allies, which together formed OPEC+ in 2017, have embarked on a series of overlapping production cuts since 2022, the most recent of which came into effect in January.
In addition to Saudi Arabia's and Russia's 1.5mn bpd of voluntary production and export cuts, extended through first-quarter 2024, other members have pledged to roll back a combined 696,000 bpd of production.
Nevertheless, while OPEC'S linchpin producer Saudi Arabia is pumping below 9mn bpd, levels not seen since the pandemic, others including Iraq and Kuwait continue to produce much above their output quotas, setting the stage for a potential compliance row in coming months.
The next OPEC+ decision will come in March, when the voluntary production cuts are set to expire. The group is due to meet next in Vienna June 1.
The multilayered output cuts have not succeeded in preventing a weak pricing structure at the start of 2024, fueled by demand uncertainty, high interest rates and record production in some NON-OPEC countries, the S&P Global Commodity Insights report said.
Platts, a unit of S&P Global Commodity Insights, last assessed dated Brent price at $84.62 per barrel on February 12, having recovered from a December dip but well below the 2023 high of $97.92 per barrel reached September 27.
OPEC has blamed poor prices on financial speculators but said in the report that short selling had eased.
'Oil prices were further buoyed by stronger-than-expected macroeconomic data, specifically from the US, and signs of robust physical market fundamentals,' it said.
Moving forward, OPEC remains optimistic about global economic growth, predicting a GDP increase of 2.7% in 2024 and 2.9% in 2025, driven by waning inflation and India and China.