Reuters reported sources close to the Organization of the Petroleum Exporting Countries (OPEC) suggesting that the organization is likely to maintain its optimism regarding oil demand growth for the coming year, as it publishes its forecasts this month. While the organization expects growth to slow down compared to the current year, it remains higher than average.
OPEC's forecasts for crude oil demand growth in 2024 are expected to be lower than the current year’s estimate of 2.35 million barrels per day, or 2.4 percent of total production, a notably high rate as the world emerges from the COVID-19 pandemic. Even if the figure decreases, it will still be much higher than the annual average of the past decade, excluding pandemic years, and will surpass the International Energy Agency's (IEA) expectations, which foresee a significant slowdown in demand growth next year to 860,000 barrels per day.
Disputes have arisen between OPEC and the IEA in recent years, with OPEC criticizing the agency—advising industrialized countries—for what it deems irresponsible forecasts and subsequent data revisions. Oil demand growth serves as an indicator of the potential strength of the oil market and is one of the factors influencing production policy decisions made by OPEC and its allies, collectively known as OPEC+.
The group extended supply restrictions until 2024 in June to support the market amid declining prices due to demand concerns. For 2024, three OPEC sources indicated that demand growth is likely to slow, but not as severely as predicted by the IEA, expecting it to exceed one million barrels per day but remain below two million. A fourth source close to OPEC stated that demand is expected to rise by at least 1.5 million barrels per day.
An OPEC source remarked, "The increase in oil demand in 2024 is expected to be much lower than that of 2023," adding it may range between 1.5 and 1.7 million barrels per day. OPEC is expected to release its initial 2024 demand forecasts in its monthly report on July 13. The organization has not yet responded to a request for comment sent by email on Thursday.
Another source discussed OPEC's outlook for demand in 2024, stating, "It will be more optimistic than that of the IEA." Senior officials from OPEC countries, such as Amin Nasser, CEO of Saudi Arabia's Aramco, expressed optimism regarding crude oil demand forecasts despite the opposing economic factors affecting prices. He noted, "Asia is growing. Demand in China alone grew by three million barrels per day between 2019 and 2023, and India one million barrels per day, so there is an increase in demand."
Those preparing oil forecasts often need to make significant revisions due to changes in economic outlooks and geopolitical fluctuations, which this year included China’s abandonment of COVID-19 restrictions and interest rate hikes. OPEC initially projected demand growth in 2023 at 2.7 million barrels per day in its first forecast published in July 2022, later revising it downward to 2.35 million barrels per day.
