OPEC on Monday reduced its forecast for global oil demand growth in 2024, marking the group's third consecutive downward revision. This adjustment reflects weaker data received throughout the year and highlights the challenges faced by OPEC+, which includes the Organization of the Petroleum Exporting Countries and allies like Russia. The group plans to raise output in December, following an earlier delay in response to falling oil prices.
In its latest monthly report, OPEC projected that world oil demand will rise by 1.93 million barrels per day (bpd) in 2024, down from the 2.03 million bpd growth forecasted just last month. Until August, the organization had kept its forecast unchanged since it was first set in July 2023.
China played a significant role in the 2024 forecast downgrade. OPEC reduced its growth projection for Chinese oil demand to 580,000 bpd from 650,000 bpd. While government stimulus measures are expected to boost demand in the fourth quarter, OPEC noted that economic challenges and the global shift towards cleaner fuels are putting pressure on oil use.
“Diesel consumption remained subdued due to slowing economic activity, particularly in the building and housing construction sectors, along with the increasing substitution of liquefied natural gas (LNG) for petroleum diesel fuel in heavy-duty trucks,” OPEC said, referencing August data.
Following the report's release, oil prices continued an earlier decline of about 2%, with Brent crude trading below $78 a barrel.
There remains a significant divergence in forecasts for 2024 demand growth, with differences largely centered on China and the pace of the global transition to cleaner fuels. OPEC's outlook remains one of the more optimistic, standing above many industry estimates, including the far lower projections from the International Energy Agency.
OPEC pointed out that this year's demand growth still exceeds the historical average of 1.4 million bpd seen prior to the COVID-19 pandemic, which caused a sharp decline in oil usage. Looking ahead, the group also cut its 2025 global demand growth estimate, reducing it to 1.64 million bpd from 1.74 million bpd
