Group sticks to 2024 oil demand growth forecast of 2.25 mbpd
Opec predicted robust fuel use in the summer months on Thursday and stuck to its forecast for relatively strong growth in global oil demand in 2024, highlighting an unusually large gap between predictions of oil demand strength.
The Organisation of Petroleum Exporting Countries, in a monthly report, said world oil demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. Both forecasts were unchanged from last month.
A boost to economic growth could give extra tailwind to oil prices, which have rallied above $90 a barrel this year on tighter supply and war in the Middle East.
Opec and its allies, known as Opec+, last week agreed to keep oil output cuts in place until the end of June.
“Despite some downside risks, the continuation of the momentum seen in the beginning of the year could result in further upside potential for global economic growth in 2024,” Opec said in the report.
Looking ahead to the summer, when fuel demand rises seasonally as people travel more, Opec said global jet/kerosene fuel demand will rise by 600,000 bpd year on year in the second quarter, gasoline by 400,000 bpd and diesel by 200,000 bpd.
Following last week’s meeting of a panel of top Opec+ ministers, the full group will meet in June to decide whether to extend output cuts further or return some supply to the market.
“The robust oil demand outlook for the summer months warrants careful market monitoring, amid ongoing uncertainties, to ensure a sound and sustainable market balance,” the report said.
Opec sees world economic growth of 2.8 per cent in 2024, steady from last month, and said the US economy was set to give the traditional summer boost to fuel demand.
“The upcoming driving season in the US is expected to provide the usual additional demand for transportation fuels,” Opec said.
Demand view split
There is a wider than usual split between forecasters on the strength of oil demand growth in 2024, partly due to differences over the pace of the world’s transition to cleaner fuels.
This week, energy trader Vitol said demand will rise by 1.9 million bpd this year, not far from Opec’s view, while the US government’s energy forecaster cut its growth prediction to 950,000 bpd.
The International Energy Agency, which represents industrialised countries and forecasts oil demand will peak by 2030, sees an expansion of 1.33 million bpd and is scheduled to update its figures on Friday.
Opec believes oil use will keep rising for the next two decades and has not forecast a peak.
The Opec+ alliance has implemented a series of output cuts since late 2022 to support the market. A new cut of 2.2 million bpd for the first quarter took effect in January and was later extended to cover the second quarter.
The Opec report said Opec oil production was steady in March, rising by 3,000 bpd to 26.60 million bpd despite the new round of cuts, with modest increases in Iran and Saudi Arabia.
Demand for Opec crude this year is set to average 28.5 million bpd, the report said, up 100,000 bpd from the previous forecast and, in theory, giving the group room to pump more.