The Organization of the Petroleum Exporting Countries (OPEC) has revised its global oil demand projections for the years 2024 and 2025 downwards, coinciding with a drop in Brent oil prices below the $70 per barrel mark as of Tuesday. In its latest monthly oil market report, OPEC has adjusted its demand growth estimate for the current year to 2.03 million barrels per day, slightly down from the previously forecasted 2.11 million barrels as projected in August.
The organization cited the necessity of these adjustments as they are grounded in actual data collected throughout the year. Interestingly, oil demand growth in member countries outside of the Organization for Economic Co-operation and Development (OECD) is expected to increase by 1.90 million barrels per day, with China taking the lead in this growth trajectory. Moving into the forthcoming year, OPEC still considers the 2024 headline outlook as 'well above' the historical average of 1.4 million barrels per day that was experienced before the upheaval triggered by the coronavirus pandemic. For 2024, OPEC's latest forecast indicates a rise in oil demand by 1.74 million barrels per day, which is a decrease from the earlier predicted figure of 1.78 million barrels.
Non-OECD demand is projected to grow by 1.64 million barrels per day, with notable increases expected from both China and the Middle East. It is pertinent to mention that OPEC had previously downgraded its oil demand forecasts for the years 2024 and 2025 back in August. Recent figures show that West Texas Intermediate (WTI) crude oil traded down by 4.5% at $65.64 a barrel during Tuesday afternoon trading, while Brent crude saw a drop of 3.9% to $69.05 per barrel. On a related note, key members of OPEC alongside their allies—collectively referred to as OPEC+—have recently agreed to extend their voluntary oil output cuts by another two-month period.
According to ING's report released on Friday, the members are now set to gradually reinstate a total of 2.2 million barrels a day of oil supply from December 2024 through November 2025. Amid these oil demand projections, OPEC has also upgraded its global economic growth rate forecast for 2024 to 3%, an increase from the prior estimate of 2.9%.
The organization indicates that the resilience of global economic growth observed during the first half of the year has persisted into the third quarter, primarily supported by robust consumer spending, especially within the services sector. This positive trend has continued to unfold despite ongoing uncertainties regarding monetary policies, trade negotiations, and geopolitical developments. Looking ahead, OPEC continues to project that the world economy will experience a growth rate of approximately 2.9% in the coming year.
The organization has retained its growth outlook for the US economy for the years 2024 and 2025 at rates of 2.4% and 1.9%, respectively. OPEC acknowledges the presence of certain downside risks; however, the continued momentum in non-OECD economies, coupled with a rebound in growth from OECD countries, could provide additional positive momentum for global economic growth extending into 2025.
Additionally, major central banks are expected to adopt more accommodative monetary policies by the end of 2024 and throughout 2025—particularly in the United States, the Eurozone, and the United Kingdom—further bolstering near-term global economic growth prospects..