Inspenet, July 16, 2023.
OPEC is likely to have a more conservative projection for oil demand growth in 2024 compared to growth expectations for this year. Demand is expected to increase by approximately 2.35 million barrels per day this year, representing an increase of 2.4%. This growth rate is unusually high as the world recovers from the coronavirus pandemic.
When OPEC releases its first outlook later this month, it is likely to take an upbeat view on oil demand growth for the coming year. However, it is expected to forecast a slowdown compared to this year, although an above-average increase is still expected.
Despite this, the growth projection for 2024 would still be above the annual average of the last decade, with the exception of the pandemic years. In addition, it would exceed the predictions of the International Energy Agency (IEA), which forecasts a significant slowdown in demand growth for the next year, estimating an increase of 860,000 barrels per day (bpd).
In recent years, OPEC and the IEA have had differences. The Organization has criticized the IEA, which advises industrialized countries, for what it considers irresponsible predictions and subsequent revisions of data. This discrepancy reflects the different perspectives and approaches between the two organizations regarding the oil industry and demand projections.
Importance of oil demand growth
The growth in demand for oil is an important factor influencing the political decisions of OPEC and its allies. This growth is considered an indicator of the potential strength of the market. In June, the group took steps to secure the market by extending supply cuts until 2024, in response to concerns about weak demand putting pressure on prices.
According to three OPEC sources, by 2024 demand growth is expected to slow, but not as much as the IEA estimates. They forecast growth will likely be above 1 million barrels per day (bpd) and probably below 2 million bpd. These projections suggest that demand will continue to increase, albeit at a more moderate pace compared to previous years.
“You can expect the increase in oil demand in 2024 to be much lower than in 2023,” one of the OPEC sources said, adding that it could be between 1.5 and 1.7 million bpd.
“It will be higher than the IEA,” another source said of OPEC’s demand forecast for 2024.
During a conference this week, prominent leaders of OPEC member countries, such as Amin Nasser, CEO of the state-owned Saudi Aramco, expressed optimism regarding the prospects for oil demand, despite the economic challenges affecting prices.
“Asia is growing. China alone, between 2019 and 2023, (had) 3 million bpd of growth, India 1 million bpd of growth, so there is a rebound in demand,” he said.
Analysts making oil demand forecasts are often required to make significant revisions due to changes in the economic outlook and geopolitical uncertainties. This year, those factors included the lifting of COVID-19 restrictions in China and rising interest rates.
Initially, the Organization of the Petroleum Exporting Countries forecast demand growth of 2.7 million barrels per day (bpd) by 2023 in its first forecast published in July 2022. However, they later revised this figure down to 2.35 million bpd. These revisions reflect the need to adjust forecasts based on changes in the economic landscape and ongoing geopolitical circumstances.
Source: https://www.rumbominero.com/peru/noticias/internacionales/opep-demanda-de-petroleo-2/
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