OPEC has once again reduced its global oil demand growth projections for 2024 and 2025, marking the fourth straight month of downward revisions. These adjustments reflect ongoing concerns about weaker-than-expected economic performance in key Asian markets, particularly China. The organization’s latest report underscores potential consequences for the global oil market and may influence OPEC’s production strategies in the coming year.
Key Points from OPEC’s Latest Demand Forecast
- Reduced Growth Projections for 2024: OPEC now anticipates global oil demand to increase by 1.82 million barrels per day (bpd) in 2024. This is a reduction of 107,000 bpd from last month’s estimate, reflecting lower demand expectations in China and other Asian economies.
- China’s Economic Slowdown Impact: China’s economic deceleration has led OPEC to downgrade its oil demand growth projections specifically for this market. Chinese demand growth is now expected to reach just 450,000 bpd in 2024, down from the previous estimate of 580,000 bpd. For 2025, demand growth is revised to 310,000 bpd, a 100,000 bpd decrease from earlier projections.
- Continued Focus on Non-OECD Markets: Despite these reductions, OPEC forecasts that strong transportation fuel demand and economic growth in various non-OECD countries will continue to support overall oil demand. However, the impact of weaker demand in large markets such as China and potential global economic uncertainties remain significant factors.
- Adjustments in Production Policy: OPEC has postponed its planned reversal of production cuts from December 2024 to January 2025, likely in response to the revised demand outlook. These changes may also reflect OPEC’s strategic approach to balancing supply in light of softer demand forecasts.
- Outlook for 2025: For 2025, OPEC has further reduced its global demand growth projection by 103,000 bpd to 1.54 million bpd, down from last month’s forecast of 1.64 million bpd. This adjustment aligns with the organization’s more cautious stance, factoring in potential economic headwinds and reduced demand growth in China and other key markets.
Implications of the Revised Forecast
OPEC’s successive downward adjustments highlight challenges facing the global oil market, particularly from the slower-than-expected growth in China. While the cartel maintains an optimistic outlook supported by industrial and export growth, the shifting demand landscape could impact pricing, production strategies, and broader market stability.
The organization’s decision to delay production adjustments signals caution and a commitment to monitoring economic developments closely.
