OPEC stuck to its forecast for strong growth in global oil demand in 2024 on Tuesday and said it would switch to focus on projected demand for OPEC+ crude, reflecting that the wider group is now the main forum for cooperation in the market.
The Organization of the Petroleum Exporting Countries, in a monthly report, said it expected world oil demand to 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.
This is the last report before OPEC+, which groups OPEC and allies led by Russia, meets on June 1 to decide whether to extend voluntary oil output cuts into the second half of the year. OPEC sounded an upbeat tone on the economic outlook.
“Despite certain downside risks, the continued momentum observed since the start of the year could create additional upside potential for global economic growth in 2024 and beyond,” OPEC said in the report.
OPEC+ has implemented a series of output cuts since late 2022 to support the market. The latest cut of 2.2 million bpd is in place until the end of June unless it is extended, as some OPEC+ sources have said it could be.
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.
The International Energy Agency, which represents industrialised countries and forecasts oil demand will peak by 2030, sees an expansion of 1.2 million bpd and is scheduled to update its figures on Wednesday.
OPEC believes oil use will keep rising for the next two decades and has not forecast a peak.
SHIFTS FOCUS TO OPEC+
OPEC also said it would stop publishing a calculation of the world’s demand for its own crude – a figure watched as an indicator of market strength – and would focus on demand for oil from OPEC+.
The move “demonstrates solidarity and unity” within the OPEC+ framework, OPEC said, as well as removing the “potential for misunderstanding.” OPEC+ has been working together since 2016 through a pact called the Declaration of Cooperation (DoC).
An OPEC+ source told Reuters, which reported on the switch last week, that the move reflected the fact that OPEC+ demand was now more relevant because the DoC nowadays was the framework for cooperation on the oil market.
In the report, OPEC projected 2024 demand for DoC crude at 43.2 million bpd, compared with world oil demand of 104.5 million bpd, and said the group produced 41.02 million bpd in April, below the expected demand.
OPEC itself pumped 26.58 million bpd in April, down 48,000 bpd, the report said.
