Yemisi Izuora
The Organization of Petroleum Exporting Countries (OPEC ) has cut its 2024 global oil demand growth forecast for a fifth straight month on Wednesday and by the largest amount yet, a series of downgrades that highlights China’s sputtering role as the world’s demand growth engine.
The weaker outlook underlines the challenge facing OPEC+, which comprises the OPEC and allies such as Russia.
The OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
In a monthly report, OPEC said it expects 2024 global oil demand to rise by 1.61 million barrels per day (bpd), down from 1.82 million bpd last month.
The OPEC also cut its 2025 growth estimate to 1.45 million bpd from 1.54 million bpd.
The 210,000 bpd cut in the 2024 figure is the largest of the five reductions OPEC has made in its monthly reports since August. In July, OPEC had expected world demand to rise by 2.25 million bpd.
“The bulk of this revision is made in the third quarter, taking into account recently received bearish data for the third quarter,” OPEC said in the report of the 2024 forecast.
China accounted for part of the latest downgrade, as did India, other Asian countries, the Middle East and Africa, OPEC said. OPEC now expects Chinese oil demand to rise by 430,000 bpd in 2024, down from 760,000 bpd in July.
After decades as the dominant driver of expanding oil consumption, China’s crude oil imports are on track to peak as soon as next year as transport fuel demand begins to decline for the world’s top crude buyer.
Oil pared gains after the OPEC report was issued, with Brent crude trading below $73 a barrel.
Forecasts on the strength of demand growth in 2024 vary widely, partly due to differences over demand from China and the pace of the world’s switch to cleaner fuels.
OPEC’s outlook remains towards the top of industry estimates and contrasts with the International Energy Agency’s far lower view. Still, the cuts to OPEC’s forecasts in the last few months bring its view closer to that of the IEA.
The IEA, which represents industrialised countries, sees demand growth of 920,000 bpd in 2024.
OPEC+ has implemented a series of output cuts since late 2022 to support prices.
The group was to start unwinding the most recent layer of cuts of 2.2 million bpd from January but said on Dec. 5 it will delay the plan until April 2025, as weak demand and rising supply outside the group maintain downward pressure on the market.