Opec holds to robust oil demand forecast
, March 13, 2024
Opec lefts its oil demand growth forecasts for 2024 unchanged at 2.2m b/d with the growth concentrated in emerging economies. The outlook for 2024 would represent a third year in a row of more than 2m b/d of demand growth and four years in a row of robust growth when including the pandemic recovery year of 2021, reported EmiratesNBD Research.
At a regional level, Opec expects emerging economies to show oil demand growth of 2m b/d on their own, with China, India and other Asian economies representing almost 60 per cent of that total. The Middle East will also show strong growth according to Opec with almost 400k b/d of demand growth.
On supply, Opec estimates non-Opec supply growth to slow this year but still record a strong increase of almost 1.5m b/d, down from more than 2m b/d in 2023. The US, Canada, Brazil and Norway will show the largest increases in supply for 2024.
Opec’s robust demand forecast has stood in marked contrast to the IEA which had initially been projecting less than 1m b/d of demand growth this year based on a pronounced slowdown expected for the global economy.
The IEA will release its own revised oil market report later this week and it has been edging its demand growth forecast higher, though not to the scale of the Opec projections.
EmiratesNBD Research expects a wide gap to remain between the two main forecasting agencies given they have distinct perspectives on the outlook for oil demand with the IEA expecting to see peak oil consumption by the end of the decade whereas Opec forecasts long-run demand growth for oil out to the middle of the century.
According to the secondary sources published in the Opec monthly oil market report, compliance with cuts for those producers providing additional output restrictions in Q1 was relatively good in the first two months of the year.
Saudi Arabia has been roughly at 100 per cent compliance levels, the UAE and Kuwait at 99 per cent while Iraq has been closer to 95 per cent among the larger producers. Iraq’s oil minister has acknowledged it has missed its target and that the country would compensate with deeper cuts.
COMPLIANCE WITH TARGETS: SECONDARY SOURCES
Separate to the oil market report, Russia’s president Vladimir Putin said that “Opec+ does help hold up the oil prices” but cautioned that “output is dropping while it grows in other countries such as the US.”
Opec+ producers have been losing market share as they curtail production to put a floor under prices and prompt inventory draws.
At some point several million barrels per day of Opec+ oil will need to return to markets as persistent production curbs eat into the economics of capacity expansions that many members of Opec+ have undertaken.
